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Market Forces Shaping Human Capital in Eighteenth Century London

Karine van der Beek () and Moshe Justman

No 2013-014, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: We draw on quantitative and descriptive data from Robert Campbell's widely cited manual for prospective apprentices, The London Tradesman (1747), to demonstrate the responsiveness of apprenticeship in mid-eighteenth century London to market forces of supply and demand. We regress apprenticeship premiums on journeymen's wages, set up costs and a selection of employment conditions and requirements across 178 trades, and find a significant elasticity of 0.4 with respect to wages and 0.25 with respect to set-up costs. We interpret this as supporting an economic model that views premiums as bounded from above by the expected benefits of acquiring the skills of the trade (Lane, 1996); bounded from below by the expected net training costs to the master, taking into account the possibility of the apprentice terminating his service prematurely (Wallis, 2008); and reflecting the relative bargaining power of master and parent. This supports the thesis that apprenticeship played an important role in adapting the English workforce to the skill requirements of the Industrial Revolution. Moreover, by demonstrating the internal and external consistency of Campbell's observations, our findings support their further use as a unique, invaluable source of detailed, trade-specific wage data from the early years of the Industrial Revolution.

Keywords: premium; wages; setting-up costs; human capital; industrial revolution; apprenticeship; Campbell; Eighteenth century England (search for similar items in EconPapers)
JEL-codes: K31 N33 O15 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-his
Note: MIP
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Journal Article: Market forces shaping human capital in eighteenth-century London (2015) Downloads
Working Paper: Market Forces Shaping Human Capital in Eighteenth Century London (2013) Downloads
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