Anonymity, efficiency wages and technological progress

Broadberry, S., Ghosal, S. and Proto, E. (2017) Anonymity, efficiency wages and technological progress. Journal of Development Economics, 127, pp. 379-394. (doi: 10.1016/j.jdeveco.2016.06.002)

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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 modernising country, on efficiency wages and technological progress.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Proto, Professor Eugenio and Ghosal, Professor Sayantan
Authors: Broadberry, S., Ghosal, S., and Proto, E.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Development Economics
ISSN (Online):1872-6089
Published Online:27 June 2016
Copyright Holders:Copyright © 2016 Elsevier B.V.
First Published:First published in Journal of Development Economics 127:379-394
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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