The Forgotten Discontinuity: Labor Input. Technological Change and New Goods during the Industrial Revolution

Abstract

How revolutionary was the Industrial Revolution? One generation of scholars has argued -not very. This article takes issue with that conclusion. It examines three aspects that fundamentally recast our evaluation of the economic transformation that began in Britain in the 1750s. First, more flexible approaches to TFP accounting break down the simple distinction between capital accumulation and technological change. Second, hedonic measures of output regularly produce much higher numbers for output growth - much of the downward revisionism is a reflection of measurement that is too narrow to capture of technological change. Third, the value of variety must have been very large. Model calculations for the impact of these corrections are performed and discussed. The article concludes with an agenda for future research.