Occupational Choice and the Spirit of Capitalism

Matthias Doepke and Fabrizio Zilibotti

No 2949, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The British Industrial Revolution triggered a reversal in the social order 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 thrifty middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation in which 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. If financial markets are imperfect, 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 ethic, 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: social classes; endogenous preferences; occupational choice; industrial revolution (search for similar items in EconPapers)
JEL-codes: J24 N2 N3 O11 O15 O40 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2007-07
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (19)

Published - published in: Quarterly Journal of Economics, 2008, 123 (2), 747-793

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Journal Article: Occupational Choice and the Spirit of Capitalism (2008)
Working Paper: Occupational Choice and the Spirit of Capitalism (2007)
Working Paper: Occupational Choice and the Spirit of Capitalism (2007)
Working Paper: Occupational Choice and the Spirit of Capitalism
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