Anonymity, efficiency wages and technological progress

Stephen Broadberry, Sayantan Ghosal, Eugenio Proto*

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)

127 Downloads (Pure)

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 provides an analysis of one such link: the role of commercialisation in raising wages as impersonal 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 will, under certain conditions, lead to higher capital-intensity in the production technology and hence, 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. The model highlights the effects of changes in the availability of information, typical of a modernizing country, on efficiency wages and technological progress.

Original languageEnglish
Pages (from-to)379-394
Number of pages16
JournalJournal of Development Economics
Volume127
Early online date27 Jun 2016
DOIs
Publication statusPublished - 1 Jul 2017

Structured keywords

  • ECON Applied Economics

Keywords

  • Anonymity
  • Commercialisation
  • Efficiency wages
  • Industrial revolution
  • Learning by doing

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