Post-Malthusian Population Model of the British Industrial Revolution in a Lewis Unlimited Supply of Labor Model

Abstract

To explain the population equilibrium of the British Industrial Revolution, this study proposes a two-sector economy that produces both agricultural foods and manufacturing goods. A Lewis model is used to discuss the interrelations among population increase, capital accumulation, and structural change of the British economy in the 19th century. We place capital accumulation at the center of the model to explain the growth in population size. Structural changes in the economy that are induced by capital accumulation favor the employment of labor in the manufacturing sector and trigger population increase. We examine this hypothesis by applying Granger causality tests to such variables as population size, capital accumulation, trade volume, and structural change in the British economy during the Industrial Revolution.Keywords: Britain's Industrial Revolution, Lewis's model, Capital accumulation, Population increaseJEL Classification: J11, N10(ProQuest: ... denotes formulae omitted.)I. IntroductionThe growth of population size is essential to the transition from a post- Malthusian regime to a modern economy regime. The post-Malthusian implies the stage after the escape from the Malthusian trap. This argument is rooted in the Boserupian viewpoint (1981) on the positive effects of population size on technical progress. Large-scale economies, which result from the increased demand caused by the increase in population size, generate technical progress. The unified growth model of Galor and Weil (1980) demonstrates that large-scale economies lead to economic conditions in which investments on human capital are favored. However, a gap remains between a gpost-Malthusian population economyh and a gmodern economyh with respect to determining population size. How the increase in population is achieved remains unclear, and how such an increase provides economic environments that are conducive for human capital investments is poorly understood.This study employs capital accumulation to determine the gpost- Malthusian population equilibrium,h which can fill the gap in the research on the population equilibrium between the gMalthusian stationary stateh and the gModern neo-classical population equilibriumh of family size choice. The function of capital goods in the context of the British Industrial Revolution as a growth model is rarely discussed. The function of capital goods in the transitional growth path of a unified growth model remains uncertain. Voigtla.nder and Voth (2006) presented a growth model of the British Industrial Revolution. This model considered capital goods. Their study indicated that an Ashton gwave of gadgetsh in the Industrial Revolution generated the growth of the British economy. The endogenous growth model of a gvarietyh kind did not determine the population size.We employ the gUnlimited Supply of Labor modelh of Lewis to discuss the function of capital accumulation during the British Industrial Revolution and relate it to the determination of population size. Yang and Kim (2013) suggested a population equilibrium for the Malthusian economy of a one-sector agricultural economy. Their study emphasized the improvement of the marginal physical productivity of the agricultural worker in escaping the Malthusian trap. The present work retains the biophysical wage rate hypothesis of Fogel. Thus, the post-Malthusian model implies that income significantly affects the choice of family size.The three factors of economic production are land, labor, and capital. Land is specific to the agricultural sector, whereas labor and capital move between the manufacturing and agricultural sectors. Capital and labor are utilized in fixed proportions for agricultural produce but are interchangeable for the production of goods. Land is specific to agricultural produce.An economy is Malthusian when the land factor can effectively constrain population increase. …