Working Paper: CEPR ID: DP14762
Authors: Nicholas Crafts
Abstract: 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.
Keywords: Engels Pause; Factor Shares; Industrial Revolution; Labour Productivity; Real Wages
JEL Codes: N13; O33; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological change (O33) | Productivity growth (O49) |
| Productivity growth (O49) | Real wage growth (J39) |
| Modest TFP growth (O49) | Real wage growth (J39) |
| Modest TFP growth (O49) | Labor productivity growth (O49) |
| Technological change (O33) | Real wage growth (J39) |
| Real GDP per worker (J89) | Labor's share of national income (E25) |