The Economic History Review

Factor prices and induced technical change in the industrial revolution

Volume 76 Issue 2
Home > The Economic History Review > Factor prices and induced technical change in the industrial revolution
Pages: 599-623Authors: Ravshonbek Otojanov, Roger Fouquet, Brigitte Granville
Published online: September 26, 2022DOI: 10.1111/ehr.13194

Log in to access the full article.

Using historical data for the 1700–1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour-saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that ‘induced innovation’ was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital-augmenting and energy-augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital–labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.