Why england? demand, growth and inequality during the industrial revolution

that builds on big-push models by Murphy, Shleifer and Vishny (1989), combined with hierarchical preferences. The interaction of exogenous demographic factors (in particular the English low-pressure variant of the European marriage pattern) and redistributive institutions – such as the “old Poor Law ” – combined to make an Industrial Revolution more likely. Essentially, industrialization is the result of having a critical mass of consumers that is “rich enough ” to afford (potentially) mass-produced goods. Our model is then calibrated to match the main charac-teristics of the English economy in 1750 and the observed transition until 1850. This allows us to address explicitly one of the key features of the British Indus-trial Revolution unearthed by economic historians over the last three decades – the slowness of productivity and output change. In our calibration, we find that the probability of Britain industrializing is 5 times larger than France’s. Contrary to the recent argument by Pomeranz, China in the 18th century had essentially no chance to industrialize at all. This difference is decomposed into a demographic and a policy component, with the former being far more important than the latter. 1