DP14762 Slow Real Wage Growth during the Industrial Revolution: Productivity Paradox or Pro-Rich Growth?

Author(s): Nicholas Crafts
Publication Date: May 2020
Keyword(s): Engels' pause, Factor shares, industrial revolution, labour productivity, real wages
JEL(s): N13, O33, O47
Programme Areas: Economic History, International Macroeconomics and Finance
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14762

I examine the implications of technological change for productivity, real wages and factor shares during the industrial revolution using recently available data. This shows that real GDP per worker grew faster than real consumption earnings but labour's share of national income changed little as real product wages grew at a similar rate to labour productivity in the medium term. The period saw modest TFP growth which limited the growth both of real wages and of labour productivity. Economists looking for an historical example of rapid labour-saving technological progress having a seriously adverse impact on labour's share must look elsewhere.