Paper #195

Title:

Falling real wages during an industrial revolution

Author:

Antonio Ciccone

Date:

October 1996

Abstract:

The Industrial Revolution was characterized by technological progress and an increasing capital intensity. Why did real wages stagnate or fall in the beginning? I answer this question by modeling the Industrial Revolution as the introduction of a relatively more capital intensive production method in a standard neoclassical framework. I show that {\sl real wages fall in the beginning of an industrial revolution if and only if technological progress in the relatively more capital intensive sector is relatively fast.}

Keywords:

Industrial revolution, technological change, capital intensive, production, neoclassical growth model

JEL codes:

D5, N1, O1, O3

Area of Research:

Macroeconomics and International Economics

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