Working Paper: NBER ID: w12917
Authors: Matthias Doepke; Fabrizio Zilibotti
Abstract: The British Industrial Revolution triggered a reversal in the social order of society whereby the landed elite was replaced by industrial capitalists rising from the middle classes as the economically dominant group. Many observers have linked this transformation to the contrast in values between a hard-working and frugal middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation where both the divergence of attitudes across social classes and the ensuing reversal of economic fortunes are equilibrium outcomes. In our theory, parents shape their children's preferences in response to economic incentives. This results in the stratification of society along occupational lines. Middle-class families in occupations that require effort, skill, and experience develop patience and work ethics, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific attitudes, which are rooted in the nature of pre-industrial professions, become key determinants of success once industrialization transforms the economic landscape.
Keywords: Occupational Choice; Industrial Revolution; Cultural Values; Economic Transformation; Social Stratification
JEL Codes: J24; N2; N3; O11; O15; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic conditions (E66) | parental investments in children's preferences (D15) |
| parental investments in children's preferences (D15) | children's preferences (J13) |
| children's preferences (J13) | occupational choices (J29) |
| occupational choices (J29) | economic outcomes (F61) |
| economic conditions (E66) | stratification along occupational lines (J62) |
| class-specific attitudes (D91) | success in industrialized economy (P12) |
| divergence in preferences (D11) | economic ascendency of middle class (P17) |
| accumulation of wealth by industrial dynasties (P12) | deterioration of work ethic (J81) |
| deterioration of work ethic (J81) | preference for leisure (D11) |
| preference for leisure (D11) | downfall of industrial dynasties (N13) |
| stratification of preferences and values (D46) | reversal of fortunes during industrial revolution (N13) |