Is Anonymity the Missing Link Between Commercial and Industrial Revolution?

Stephen Broadberry, Sayantan Ghosal and Eugenio Proto

No 270750, Economic Research Papers from University of Warwick - Department of Economics

Abstract: The Industrial Revolution is often characterized as the culmination of a process of commercialisation; however, the precise nature of such a link remains unclear. This paper models and analyses one such link: the impact of a higher degree of anonymity of market transactions on relative factor prices. Commercialisation raises wages as impersonal labour market transactions replace personalized customary relations. This leads, in equilibrium, to higher real wages to prevent shirking. To the extent that capital and labor are (imperfect) substitutes, the resulting shift in relative factor prices leads to the adoption of a more capital-intensive production technology which, in turn, results in a faster rate of technological progress via enhanced learning by doing. We provide evidence using European historical data that England was among the most urbanized and the highest wage countries at the onset of the industrial revolution.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 40
Date: 2011-12
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Related works:
Working Paper: Is Anonymity the Missing Link Between Commercial and Industrial Revolution? (2011)
Working Paper: Is Anonymity the Missing Link Between Commercial and Industrial Revolution? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270750

DOI: 10.22004/ag.econ.270750

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