Two productivity puzzles in British economic history

                         Bekar, Clifford Thomas; PhD

                         SIMON FRASER UNIVERSITY (CANADA),1999

                         This thesis explores two productivity puzzles of British economic history, puzzles that form the basis for
                         much current policy discussion in industrialized and developing countries. The first is the choice of
                         English peasants to farm open rather than consolidated fields; most scholars agree that the latter were
                         more productive. The second is the prolonged period of time required for the technological
                         breakthroughs of the Industrial Revolution to impact productivity growth. The first chapter tests the
                         robustness of Deirdre McCloskey's theory that open field agriculture resulted from behavior towards risk.
                         Employing a larger data set than McCloskey I develop better estimates of her key parameters. I use these
                         new parameter estimates to test the robustness of her theory. I find it is not as robust as she suggests. I
                         also find that her hypothesis does not hold when peasants are less than infinitely risk averse; even
                         extremely risk averse peasants would consolidate their fields. Chapter Two examines how medieval
                         peasants survived chronically bad seed yields. Three explanations dominate: peasants scattered their
                         land to reduce the harvest's variance; peasants stored grain; informal networks were developed to
                         facilitate income sharing. Many researchers have addressed the viability and cost of these alternatives
                         but none has ascertained their relative efficacy. I employ a simulation to rank scattering, saving, and
                         pooling in terms of their effects on mortality. I find that pooling was the most effective insurance
                         mechanism available to medieval peasants; pooling and storage almost always dominate scattering; and
                         even small amounts of savings were more effective than scattering. The third chapter deals with new
                         measures of productivity and per-capita output that suggest there was no dramatic acceleration of growth
                         in the early Industrial Revolution. Most economic historians confirm that the period was a highly
                         innovative one. This is the productivity paradox of the Industrial Revolution—slow observed
                         growth in a period of rapid innovation. Many explanations have been advanced to explain the paradox; I
                         find them all lacking. My explanation is that the Industrial Revolution is best understood as a paradigm
                         shift—a fundamental alteration in the structure of an economy caused by new technologies. Paul
                         David has identified the combination of rapid innovation and slow productivity growth in his study of
                         electricity's introduction. Many authors have modeled this dynamic, I adopt one developed by Grossman
                         and Helpman. The model focuses on the slow diffusion of radical innovations along with the
                         development of necessary small-scale innovations needed to make such a technology productive. I link
                         the historical literature on the development of key Industrial Revolution technologies to the parameters
                         of the theoretical literature. I find that the predictions of the theoretical literature are borne out in the
                         historical literature. This eliminates the productivity paradox of the Industrial Revolution. It also suggests
                         some broad parallels between the growth experiences of late 18<super>th</super> century Britain and
                         late 20<super>th</super> century America.


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