The plague, the skill-premium, and the road to modern economic growth

Jensen, Martin Kaae; Luo, Rui

Abstract

When bubonic plague arrived in Britain in the mid-14th century, it caused dramatic economic and structural change. Within 50 years, the skill-premium was reduced by half, and another 50 years on, agriculture's share of the labor force had declined by more than 20 percentage points. This paper develops a two-sector pre-industrial growth model and draws on recent data sources covering Late Medieval and Early Modern Britain to explain these and the ensuing developments. Our main findings are that the skill-premium's decline was related to the guild and apprenticeship system and that it and the other post-Plague adjustments were crucial determinants of the British trajectory toward industrialization. In particular, prior sectoral transformation and the skill-premium's determination were important when the Early Modern population boom (1525-1654) threatened to reverse the adjustments caused by the Plague.

Citation

Jensen, M. K., & Luo, R. (2024). The plague, the skill-premium, and the road to modern economic growth. Macroeconomic Dynamics, https://doi.org/10.1017/S1365100523000573

• Journal Article Type: Article
• Acceptance Date: Oct 27, 2023
• Online Publication Date: Feb 12, 2024
• Publication Date: Feb 12, 2024
• Deposit Date: Jan 24, 2024
• Publicly Available Date: Feb 12, 2024
• Journal: Macroeconomic Dynamics
• Print ISSN: 1365-1005
• Electronic ISSN: 1469-8056
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1017/S1365100523000573
• Keywords: Unified growth theory; skill-premium; physical-to-human capital ratio; sectoral transformation; pre-industrial economic development; long-run economic history
• Public URL: https://nottingham-repository.worktribe.com/output/30137480
• Publisher URL: https://www.cambridge.org/core/journals/macroeconomic-dynamics/article/plague-the-skillpremium-and-the-road-to-modern-economic-growth/F003B9EC88C45BFB8BFEAE7C6C4F9D66