Anonymity, Efficiency Wages and Technological Progress

Stephen Broadberry, Sayantan Ghosal and Eugenio Proto

No 8791, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Although the Industrial Revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper models and analyzes such link: the role of commercialisation in raising efficiency wages as impersonal and anonymous labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices leads to higher capital-intensity in the production technology, resulting in a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the Industrial Revolution. We finally calibrate the model to quantify the impact of a higher degree of anonymity on industrial production growth in England between 1300 and 1800.

Keywords: anonymity; industrial revolution; commercialisation; learning by doing; efficiency wages (search for similar items in EconPapers)
JEL-codes: N13 O14 O43 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2015-01
New Economics Papers: this item is included in nep-gro, nep-his and nep-lab
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Published - published in: Journal of Development Economics, 2017, 127 (C), 379-394.

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Related works:
Journal Article: Anonymity, efficiency wages and technological progress (2017)
Working Paper: Anonymity, Efficiency Wages and Technological Progress (2016)
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