Demographic transition and industrial revolution: A macroeconomic investigation

Abstract

All industrialized countries experienced a transition from high birth rates and stagnant standards of living to low birth rates and sustained growth in per capita income. What contributed to these transformations? Did economic and demographic changes transpire through common or distinct channels? We construct a general equilibrium model with endogenous fertility in order to quantitatively investigate the English case. We find that mortality decline significantly influences birth rates. Increased productivity has a negligible effect on birth rates but accounts for nearly all of the increase in per capita output, industrialization, urbanization, and the decline of land share in total income. The quantitative assessment of these two channels (young-age mortality and productivity) conducted in this paper sheds light on the relative importance of several theoretical mechanisms developed in this field.

Factor-eliminating technical change

“…Nevertheless, estimates of land's share in aggregate income are available. Land's income share in England was about 25% in 1600 (Clark, 2001), but by 2000 it had dropped to about 0.1% (Bar and Leukhina, 2006). 9 We can get a di¤erent, indirect measure of land's income share by looking at agriculture data.…”

“…In the latter type of model, reproducible factors can be substituted for non-reproducible factors fast enough to allow growth to persist, even though there is no augmentation of non-reproducible factors. 3 The main weakness of that theory, however, is that growth is simply a matter of chance, with R&D being totally irrelevant. If mankind has been endowed with a su¢ ciently high elasticity of substitution, then the technology for producing with less of the non-reproducible factor is available for free.…”

Growth and Structural Transformation

“…To derive the implications for relative prices, substitute (43) into (42) and rearrange to 29 In a different context, Bar and Leukhina (2010) argue that non-agriculture is more labor intensive than agriculture, and that the increase in population associated with the demographic transition could help explain the initial expansion of the non-agricultural sector in the context of England during the time of the industrial revolution.…”

Mortality versus morbidity in the demographic transition

“…These gains occurred as childhood disease morbidity fell along with mortality (Bozzoli et al, 2009; see also Voth and Leunig, 1996). 7 Compared to this clear pattern, DHS survey data presented in Figure 7 shows that cohorts of African women enjoying better childhood survival did not experience pronounced height gains.…”

“…Arora's work shows that this is because people were living longer and that noninfectious disease mortality rates among the middle-aged and elderly fell. 7 The sharp fall in the decades preceding 1850 in Figure 6 has been linked to urbanization and a series of epidemics. It preceded the secular decline of child mortality.…”