Anonymity, efficiency wages and technological progress

Although the industrial revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper provides an analysis of one such link: the role of commercialisation in raising wages as impersonal labour market transactions...

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Bibliographic Details
Published inJournal of development economics Vol. 127; pp. 379 - 394
Main Authors Broadberry, Stephen, Ghosal, Sayantan, Proto, Eugenio
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.07.2017
Subjects
Anonymity
Commercialisation
Efficiency wages
Industrial revolution
Learning by doing
N13
Efficiency wages
O14
Commercialisation
Anonymity
Industrial revolution
O43
Learning by doing
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Summary:Although the industrial revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper provides an analysis of one such link: the role of commercialisation in raising wages as impersonal labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices will, under certain conditions, lead to higher capital-intensity in the production technology and hence, a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the industrial revolution. The model highlights the effects of changes in the availability of information, typical of a modernizing country, on efficiency wages and technological progress.
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2016.06.002