DP5454 Technological Progress and Regress in Pre-Industrial Times

Author(s): Shekhar Aiyar, Carl-Johan Dalgaard, Omer Moav
Publication Date: January 2006
Keyword(s): division of labour, Malthusian stagnation, technological progress, technological regress
JEL(s): J11, O10, O33, O40
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5454

This paper offers micro-foundations for the dynamic relationship between technology and population in the pre-industrial world, accounting for both technological progress and the hitherto neglected but common phenomenon of technological regress. A growing population engenders the endogenous adoption of new techniques that increase the division of labour. Conversely, technological progress supports an increasing population in the Malthusian environment. A transient shock to population or productivity, however, induces the neglect of some techniques rendered temporarily unprofitable, which are therefore not transmitted to the next generation. When the shock passes, the division of labour remains constrained by the smaller stock of knowledge, and technology has thereby regressed. A slow process of rediscovery is required for the economy to reach its previous level of technological sophistication and population size.