1This approach dates back to Rothbarth (1946) and Habakkuk (1962), and has recently been revived by Allen1

(2009a) and modelled by Acemoglu (2010). For a more detailed critique of the hypothesis, see Kelly, Mokyr and Ó

Gráda 2012.

1

Precocious Albion: Human Capability and the British Industrial Revolution.

Morgan Kelly, Joel Mokyr, and Cormac Ó Grádarevised, July 2012

Abstract

The widespread view that English Industrial Revolution was driven by labour substituting technicalprogress caused by high wages suffers from a basic defect: although English wages were high, sotoo was English productivity. We argue instead that England’s high wages and Industrial Revolutionstemmed from a common source: the superior human capability of ordinary English workers, whowere taller, better fed, and longer lived than their European contemporaries; possessing the technicalskill or competence to implement the technology of the Industrial Revolution. While the expensiveEnglish labour thesis predicts that labour should have flowed into England from France, in fact theflow of workers was in the opposite direction, with skilled artisans moving to France, showing thatfor the skilled mechanics on which early industrialization relied, England was a low wage economy.

Introduction.

Although central to our understanding of modern economic growth, the concept of humancapital is largely absent from existing explanations of the Industrial Revolution. One recent answerto the question of why the Industrial Revolution happened first in England is that high wages thereinduced labour saving technological progress. However we show here that this high wage thesis1

suffers from a basic flaw: while wages in England were high compared with Continental Europe, sotoo was English productivity. English workers in 1780 earned about 80 per cent more than theirFrench counterparts but, when it came to manual tasks like reaping and threshing wheat, we showthat they were about 80 per cent more productive.

We argue instead, that England’s high wages and Industrial Revolution both flowed from acommon source: the superior human capability of English workers. This capability has twodimensions: one is that the average British worker was superior in definable dimensions to others.The other is that the very best and most skilled British workers were more numerous and better thantheir continental competitors. The eighteenth century saw an increasing number of scientific andtechnological ideas appear across Europe with potential economic applications, and the binding

2

constraint on economies came in applying these ideas in a practical form. England had no particularadvantage over continental Europe when it came to generating novel technological ideas: its decisiveadvantage lay instead in its ability to implement and make practical improvements to these ideas, andthis advantage came from its supply of skilled artisans and superior workmen. This supply of skilledlabour reflected in turn the superior human capability of English workers — using Heckman’s (2007)term for the triad of cognitive skills, non-cognitive skills and health-resulting from better childhoodnutrition and its well developed and flexible system of apprenticeship.

Our view of the Industrial Revolution, in other words, closely resembles that of Nelson andPhelps (1966) where a country’s ability to adopt a potential technology depends on the competenceof workers. We allow this competence in turn to depend on parental investment through aBen-Porath (1967) process, and show that this model leads naturally to a sudden take-off from a lowtechnology equilibrium to a high technology one of the sort experienced by England.

What evidence do we have for our claims about the superior human capability of Englishworkers? A growing literature, surveyed below, shows that human cognitive and other capacities arestrongly influenced by nutrition and the exposure to infectious illness from conception throughadolescence, and particularly in early childhood. Naturally, we have little evidence about thedevelopmental environment or human capability of children during the eighteenth century, but wedo have systematic measurements of two variables known to be strong indicators of the conditionsof childhood development: height and life expectancy. The differences between France and Englandin the late eighteenth and early nineteenth centuries that these reveal are startling. As we will showbelow, British men were substantially taller, had longer life expectancy, and were more skilled andbetter trained than French workers (which will be our standard of comparison).

Fogel (2004) has emphasized the synergy between income and health: rising living standardsimprove nutrition, and the taller and stronger workers that result can work harder and generate moreoutput. Here, we extend Fogel’s focus on the physiological impact of nutrition to emphasize theconnection between the higher cognitive capacity of better fed workers, and their ability to adopt andimprove technology. In addition, however, Britain’s institutions were more conducive to the kindof skill formation that may have mattered most in the Industrial Revolution.

Underlying the superior human capability of English workers in both dimensions was the factthat eighteenth century England was already a fairly prosperous place, able to support two uniquesocial institutions: the Old Poor Law, and its system of apprenticeship. The poor law was a nationalsystem of public charity funded from local taxes that went mostly to subsidize the elderly andfamilies with young children as well as the unemployed. This reduced malnutrition and gavelandlords, who paid the tax, an incentive to restrict population growth by discouraging large families,for instance through limiting the availability of housing (Solar, 1995). It also aided in some humancapital formation through so-called pauper apprenticeships.

While English school enrolment and literacy were mediocre by contemporary standards, most

This certainly was perceived by informed contemporaries. David Hume, for instance, noted that 2

“every improvement which we have made [in the past two centuries] has arisen from our imitation of foreigners ...

Notwithstanding the advanced state of our manufacturers, we daily adopt, in every art, the inventions and

improvements of our neighbours” (Hume, [1777], 1985, p. 328).

3

boys above farm labourers were trained as apprentices. In contrast to continental Europe, whereoccupational guilds enforced apprenticeship rules by regulatory power, English apprenticeship wasbased on private contracts between parents and masters, making it highly flexible in response toincreased employment opportunities in new industrial sectors. In addition, some of the leadingsectors of eighteenth century England – such as clock-and instrument-making, shipbuilding, andmining – turned out to be useful sources of the skills needed to implement the technology of earlyindustrialization.

The rest of the paper is as follows. Section 1 outlines a model where ability to adopttechnology depends on the human capability of workers, and shows how it leads to a suddentechnological take-off. Section 2 shows that while English wages were almost twice French levels,so too was English productivity in manual agricultural tasks. Section 3 outlines the large gap inheights, nutrition, and life expectancy between France and England, while Section 4 looks at thecomparative advantage of the two economies revealed by labour flows between them. Evidence forthe connection between height, wages, and human capital has hitherto been lacking before thetwentieth century, but in Section 5 we show the strong connection between these variables for a newdataset on France during its own period of rapid industrialization in the second quarter of thenineteenth century. Finally, Section 6 outlines the reasons for England’s supply of skilled artisansin its distinctive apprenticeship system, and its national Poor Law.

1 A Model of Human Capability and Technological Take-off.

In this section we outline a model of growth where an economy’s ability to implement newtechnology depends on the human capability of its workers, which is determined in turn by theinvestment of their parents in feeding and educating them. We do not model here the act of inventionitself but focus on diffusion and adoption, because Britain’s precocity was not so much in the act ofinvention itself as in the rapid utilization and improvement of new techniques wherever their origin.2

The adoption of a new technique usually required a fair amount of tweaking and microinvention toadapt a technique to local circumstances. To adopt a new technology, a country thus needs skilledworkers with some minimum level of “competence,” which is acquired by investment in humancapability in part through childhood nutrition and in part through training in the form ofmaster-apprentice contact.

Output is a function of both the quantity of workers and their “quality” (human capability).The model combines the Nelson and Phelps (1966) model in which productivity growth depends onthe difference between the actual techniques in use and the productivity of best-practice techniqueswith the Ben-Porath (1967) model, which analyses the growth of human capability as a function ofparental investment decisions.

4

The model concerns the diffusion of best-practice blueprints from the original inventor to thelevel of artisans where it can be incorporated into everyday production. We therefore define the stateof the art level of international scientific knowledge by A and assume that it grows exogenously.

~

Within a given country, the level of technology in use is A. This level of technology evolvesaccording to a Nelson-Phelps process, depending on the gap between scientific knowledge and thecountry’s own technology; and on the quality and level of skill of ordinary workers H:

(1)

where 0 < ä, å < 1. The technology in use in an economy cannot exceed the frontier value A ,and~

cannot fall below a minimum level A. To simplify notation in what follows, we assume that theminimum technological level is unity: A = 1.

The human capability of each artisan evolves according to the Ben-Porath equation:

(2)

t-1where 0 < ë ,µ < 1. I denotes investment in the young generation of workers in period t - 1 in the

t-1form of nutrition, basic schooling and training as an apprentice, and needs to equal H toì/ë

maintain the existing level of human capability of the workforce.

To close this simple model we need to specify what determines the level of investment in thenext generation of workers. We suppose that individuals have two periods in their lives: when youngthey receive investment from their parents; and when old they receive income as workers that theyuse to maximize utility which comes from their own consumption Ct and investment in their child(we assume constant population for now). The utility function is thus:

(3)

where 0 < ã < 1. Workers supply one unit of labour inelastically, and live hand to mouth, making andreceiving no bequests. It follows that parents invest a fraction ã of their income in their children.

Output in this economy comes from the production function

The analysis that follows is an adaptation of a linearized Lotka-Volterra dynamic system of two competing3

species. See e.g., Hofbauer and Sigmund, 1998, pp. 22-28.

5

(4)

t twhere 0 < á < 1 and N is the number of workers. Every worker receives an income Y /N . Eachworker pays a share of his income to the government or landlords, receiving nothing in return. Inaddition, however, the government may tax the landlord class and redistribute this money to workersin the form of a Poor Law. It follows that the disposable income of workers is (1 - ô)Y/N where ô isthe net rate of tax and rent after subtracting Poor Law transfers.

To analyse the evolution of useful knowledge A and human capital H it will be simpler, bothfor intuition and for drawing phase diagrams, to adopt the trick of using the inverse of humancapability

(5)

that we will refer to as misery, remembering that it refers to low levels of nutrition, health, schoolingand other outcomes of childhood deprivation.

It follows that useful knowledge and misery evolve according to the log-linear system ofdifference equations: 3

(6)

tAssuming that population is more than a handful of people so that N > ã(1-ô), only one coeffcientá

of this system has a sign that is not immediately obvious: the (µ-ëá) term multiplying log M in themisery equation. If µ < ëá, the real wage at the technological minimum rises as population N or nettaxes ô increase as (9) below shows. In addition, the misery process is unstable: a rise in miserylowers output and human capital investment, increasing misery next period in a self-reinforcingprocess so long as population remains stable. We therefore assume that (µ - ëá) is positive.

6

There is also the case where the isoclines exactly coincide, making every point along them a steady state.4

7

The isoclines of the system, between the minimum and maximum levels of technology, are

(7)

The knowledge-misery system has four possible steady states depending on the relative

tposition and slope of these isoclines. In the phase diagrams we denote N /ã(1-ô) by N*4 á

In panel (a) of Figure 1, the misery isocline lies everywhere above the knowledge isoclineso that misery dominates. The only equilibrium is at point B, with the log of useful knowledge equalto its lower bound, which we have set at zero.

In panels (b) and (c) the isoclines intersect at C = ( , l ) where: o—g

M

—log

— A

—

(8)

In panel (b), the own effect terms in (6) dominate the cross effect terms ä(ì-ëá) > ëå so thetechnology isocline is steeper than the misery curve. As a result, the intersection point C is globallystable.

In panel (c), cross effects dominate own effects ä(ì-ëá) < ëå so the misery curve is steeper.As a result, the intersection point at C = ( , l ) is a saddle dividing the space into two

o—g

M

—log

— A

—

basins of attraction, one converging on point D with technology at its lower bound, the other at pointE where the misery isocline cuts the upper bound of technology log A .

~

Finally, in panel (d) of Figure 1, the knowledge isocline lies everywhere above the misery

We can also allow England to have a higher value of ë in the Ben-Porath equation (2), to reflect the greater5

efficiency of its apprenticeship system in creating useful skills; but we will focus here solely on the impact of greater

transfers to workers.

8

isocline, so the system converges to a steady state at point F where the misery isocline cuts the upperbound of technology log A .

~

Intuitively, the evolution of useful knowledge and misery in (6) resembles an eco-system with

two competing species: the growth of each species is retarded by the presence of the other. In panel(a) of Figure 1, conditions are so favourable to the first “species”, misery in our case, that its“population” will be high regardless of the second species which it always drives to its minimumlevel; with the converse holding in panel (d) where the species “knowledge” dominates. In panel (b),the species have little impact on each other and both co-exist at positive levels, while in panel (c)they have a strong impact on each other but the outcome depends on which species initially has asufficiently large population to dominate the system and drive the other one out. We now show howthis simple interaction of knowledge and misery leads to a sudden take-off in knowledge: anIndustrial Revolution.

1.1 France and England.

There are two economies that we shall call France and England. Each faces the same best-practicetechnological frontier A that rises through time, reflecting the progress of Enlightenment scientific

~

knowledge in Europe, which easily crossed national boundaries.

France and England differ in only one way: initially disposable income is higher in England

E Fthan in France: w > w where subscripts E and F denote England and France respectively. This

E F)effect is amplified by the existence of a Poor Law in England (ô <ô , which may help raise medianincome even if it left the mean unaffected.5

This implies that, at the technological minimum where the system begins, workers in eacheconomy i = E, F have log disposable income

(9)

In this pre-industrial world, both economies start in a Malthusian equilibrium where birthsequal deaths. For this to be possible in a purely Malthusian world with English living standards andlife expectancies above French ones, it must be that England has a lower marriage rate and fertilityof marriage or a higher mortality rate due to a higher level of urbanization (Voth and Voigtländer,2012). The difference in fertility can also stem from the incentives created by a poor law forlandlords to minimize the number of mouths they have to subsidize as the disposable income

9

equation (9) shows. If landlords are required to provide workers with a higher level of disposable

iincome, they can increase poor law transfers by reducing the net taxes and rents ô that workers pay,

ior they can reduce N , by discouraging early marriage and so increase the marginal product of labourdirectly. We therefore expect that, in otherwise identical regions of France and England, the Englishrequirement to provide a higher level of subsistence to workers implies that English regions would

E Fsupport lower populations: N <N . This means that the English misery isocline Älog M = 0 will liebelow the French one.

In Figure 2 we denote the English and French misery isoclines by M and M respectively,E F

and the equilibrium of each economy by E and F. We want to see how these change as thetechnological frontier A gradually rises through time.

~

Our starting point, in panel (a), is a stark Malthusian world with little knowledge: log A is~

arbitrarily small and the knowledge isocline A1 lies completely below the two misery isoclines. Asa result, both economies are at an equilibrium at the lower bound of knowledge. As time passes,best-practice technology A will rise exogenously, reflecting the progress of Enlightenment useful

~

knowledge, and this will be the driving force behind the model.

2In panel (b) the knowledge frontier has risen so that the knowledge isocline A now intersectsthe English misery isocline. We suppose that misery and useful knowledge strongly affect each otherä(ì-ëá) < ëå so that the misery isocline is steeper: when the opposite holds the evolution of thesystem is broadly similar as we will see below. While a steady state exists at the knowledge frontier,as in panel (c) of Figure 1, because the English economy is starting in the basin of attraction of

10

11

the low knowledge equilibrium, it stays at this point. The rising technological frontier has no impacton production technology because the level of human capability is too low to absorb it: we might saythat the technological enlightenment has no impact down on the farm. This is the preindustrial worldof Malthusian stagnation of Hansen and Prescott (2002) and Clark (2008).

In panel (c) of Figure 2, the continued gradual rise in scientific knowledge causes thetechnology isocline to move above the English misery isocline, but still to cut the French one fromabove. As a result, while France stays at the minimum technology steady state at F, England jumpsto the technological frontier at E. A small rise in the knowledge frontier thus causes a suddendivergence between the economies to occur. Because English human capability is initially slightlyhigher than French, England can start to apply technological knowledge to production, giving riseto a cumulative process of rising living standards, rising human capital, and rising productiontechnology. A gradual rise in knowledge above a critical level causes England to experience anindustrial revolution, while France for a while appears mired in age-old backwardness.

This divergence is not permanent however. As the knowledge frontier log A continues to~

4rise in the last panel of Figure 2, the technology isocline A moves above the French misery isocline,causing France to converge to the same technological frontier as England. While technology in botheconomies is the same, living standards in England will remain higher so long as it continues toenjoy higher transfers and a lower population. However, to the extent that rising living standardserode political support for a generous poor law, while urbanization removes social restrictions onearly marriage while advances in medical knowledge reduce the “urban penalty” if higher mortality,English and French living standards will converge.

If, on the other hand, misery and technology interact weakly ä(ì-ëá) > ëå so that theknowledge isocline is steeper, the evolution of the system is slightly different. When the technologyisocline first rises above the English misery isocline, England moves to a steady state where the twointersect, and France will follow some time afterward. Both economies move steadily down alongtheir misery isoclines as the knowledge isocline rises, until they reach the technological frontier.

2 Wages and Productivity in France and England.

English wages were considerably higher than French ones on the eve of the Industrial Revolution.Allen (2009b, ch. 2) calculates that the real wages of building craftsmen in London in 1780 were 83per cent higher than those in Paris, while those of labourers were 80 per cent higher. It is, however,invalid to conclude that English labour was therefore expensive, until we compare productivity andcan thus infer unit labor costs.

We can impute labour productivity by comparing piece rates and day rates in French andEnglish agriculture. The average time needed to reap an acre of wheat in early nineteenth century

This estimate is consistent with Arthur Young’s eighteenth century observations. Dividing the median costs6

of reaping an acre of wheat (60d) by the median harvest wage (20d-22d per day) on both Young’s southern and northern

circuits yields a rate just under three man days per acre (Young 1771, IV, 293-296; 1772). Young wrote that "Strength

depends on nourishment; and if this dfference be admitted, an English workman ought to be able to do half as much work

again as a Frenchman" (Young, 1793, II, 315-316).

12

England was 2.9 man-days per acre, or 7.2 days per hectare (Clark, 1991, 449). This compares with6

France where the average cost ranged from 9.3 to 16.3 man-days per hectare, giving an average,

weighted by regional output share, of 12.9 man-days per hectare(Grantham, 1991, 362).

Clark (1991, 449) similarly estimates the average output of a day’s threshing at 0.24man-days per bushel or 0.65 man-days per hectolitre. For France, threshing took from 0.9 man-daysto 1.25 man-days per hectolitre, or nearly double the English rate (Grantham, 1991, 363).

Reaping and threshing were manual activities with almost no capital input and fairly littleskill. Even allowing for considerable measurement error, the roughly 65-75 per cent productivityadvantage for English workers suggests a real difference in the physical quality of labour. We shallsee below in Section 5 that variation was higher still within mid-nineteenth century France, with thelowest departments having one third the wage, and one quarter the agricultural productivity of thehighest.

Having shown that high wages may have reflected more productive labour rather thanexpensive labour, we now look at what made English workers more productive, and argue that theanswer lies in their higher human capability.

13

3 Human Capability in England and France.

The traditional approach to human capital in the industrial revolution is to observe that literacy wasnot high in pre-industrial England, and to conclude that human capital therefore could not havemattered. For instance, Reis (2005) estimates adult literacy in Britain around 1800 at 60 percent formales and 40 for females, slightly below Northern France (71 and 41 percent respectively) but aboveSouthern France (44 and 17 percent). It is, however, open to question whether literacy at this earlystage of the Industrial Revolution mattered a lot to technological development. Indeed, Mitch (1992,1999) has argued that for its industrial needs, Britain, despite its mediocre literacy rates, may havebeen overeducated. The point is that the standard human capital measures do not reflect England’sadvantage, or explain its precocity.

Instead of human capital in its conventional, narrow sense of rates of literacy and schooling,we want to focus on the wider concept of what Heckman (2007) has termed human capability.Human capability is the triad of cognitive skills, non-cognitive skills (for example self-control,perseverance, time preference, risk aversion, preference for leisure), and health. These componentsof human capability in turn are strongly determined by the individual’s nutritional and diseaseenvironment from conception to adolescence. Naturally we have little direct evidence on eitherhuman capability or its environmental determinants for England or France before the IndustrialRevolution, but we do have systematic data on two variables that are strongly correlated with these:height and life expectancy.

For France, England and Sweden during the nineteenth century, Crimmins and Finch (2006)find that childhood mortality rates, which reflect nutrition and environmental conditions, are stronglyinversely related with subsequent old age mortality and adult heights, which they attribute todiffering burdens of childhood infection and inflammation; while Bozzoli, Deaton andQuintana-Domeque (2009) show that postneonatal (between one month and one year after birth)mortality is a strong predictor of adult height in the US and Europe from 1950 to 1980. Case andPaxson (2008) find a strong connection between height and cognitive ability in the US and Britainsince the 1950s, with the strong impact of adult height on earning disappearing when childhoodcognitive ability is controlled for; while for industrializing England Baten, Crayen and Voth (2012)find that rising food prices are associated with subsequent falls in numeracy, measured by ability torecall one’s age. In the public health literature for developing economies, Victora et al. (2008) finda strong connection between childhood malnutrition and shorter adult height, reduced schooling, andlowered economic productivity; while Walker et al. (2011) survey the biological mechanismsthrough which stunting, iodine deficiency, and iron-deficiency anaemia inhibit brain developmentin children.

As well as being linked to cognitive function, height is closely correlated with physicalstrength. The strength of a muscle is proportional to its cross section, which increases as the squareof height as empirical studies show. For example, a study of Indian female labourers implies an

5This coefficient of variation predicts that 27.9 per cent should be below 157 cm; that 20.6 per cent should be7

above 167.8, while Villermé reports 20.0 per cent; and that 12 per cent should be over 170.5 while Villermé reports 11.2

per cent.

14

elasticity of about two between height and grip strength, while a study of champion weight liftersfound that weight lifted "varied almost exactly with height squared" (Koley, Kaur and Sandhu 2009;Forde et al. 2000).

3.1 Height in England and France.

We have systematic data on the height of young men in the late eighteenth and early nineteenthcenturies for both France and England, shown in Figure 3. The English data, from Nicholas andSteckel (1991) are the heights of convicts transported to Australia; while the French data, from Weir(1997), are the heights of accepted conscripts into the French army. The available evidenceuniformly suggests that English young men were substantially taller than their French counterparts.

English records based on convicts come disproportionately from the poorest strata of societywhich were probably shorter than average. Using records of recruits into the East India Company,Mokyr and Ó Gráda (1996) find that literate recruits were around 0.5 inches (1 cm.) taller on averagethan illiterate ones; while those from weaving backgrounds, a notoriously impoverished group inearly Victorian Britain, were up to an inch (2.5 cm.) shorter than other recruits. Using slightly laterdata, for men born between 1817 and 1841, Riley (1994, Table 1) finds that the average height ofthe shortest occupational group, manufacturing, was nearly one centimetre lower than the nationalaverage of 169.9 cm. The consensus is that heights were static or, more likely, fell somewhat duringthe early nineteenth century (Floud, Wachter and Gregory 1990, 288-290; Johnson and Nicholas1995) so it would appear plausible that average English height around 1800 was about 170 cm.

The French data are the average for 20 year old conscripts who exceeded the minimum heightrequirement, requiring the estimated average height for the total population to be corrected fortruncation. However, for 1817, complete data for all recruits is provided by Villermé (1829) whoreports the mean height of 20 year olds as 161.5 cm, with 28.6 per cent below the minimum heightof 157 cm, consistent with a normal distribution with coeffcient of variation of 4.75 per cent. At the7

same time, full adult height was attained only around age 23, so, based on English evidence(Nicholas and Steckel 1991, Figure 1; Johnson and Nicholas 1995, Figure 1) these 20 year olds wereprobably a centimetre below full adult height. This suggests average male height in 1817 France ofaround 162.5 cm, or roughly 7.5 cm shorter than the English average.

For 1825-1829, Angeville (1836, Table 3) reports the average height of accepted recruits byadministrative department, and the proportions rejected because of height or fitness. Undernormality, Angeville’s national average of 165.1 cm for accepted recruits, and 16 per cent rejected

15

6For 1,000 accepted recruits, another 335 were rejected for reasons of height, and 765 for other physical8

causes.

Assuming normality and a coeffcient of variation of 4.75 per cent implies that the average height of accepted9

recruits was 165.1 cm. Inferring average population height from this figure using Weir’s assumption of a 3.5 per cent

coeffcient of variation gives a value of 163.8 cm, close to Weir’s reported estimate.

16

for height is consistent with a population mean of 163.8 cm and a coefficient of variation of 4 percent.8

Weir (1997) reports estimates of heights from 1804 onwards based on the sample of acceptedrecruits but assumes a coefficient of variation of only 3.5 per cent: the same as in modern westernpopulations where the heights of the poor have more or less converged on those of the rich. This lowcoeffcient of variation gives a 0.4 cm increase in average height for the late 1820s compared withour estimate; but a very large gap for 1817: Weir estimates an average height of 163.2 cm comparedwith Villerme’s reported value of 161.5 cm.9

The average French figure disguises large regional variation within France. Using Angeville’sdata, assuming a coeffcient of variation of 4 per cent, the gap between the tallest and shortestdepartments is 8 centimetres, with the tallest departments being only 1-2 cm below the Englishaverage. While 16 per cent of recruits nationally were below the 157 cm threshold, in the shortestdepartments this rises to 33 per cent.

As we noted above, modern studies suggest that height was correlated was a range ofproductivity- enhancing capabilities, both physical and cognitive. It stands to reason that the highercognitive ability of British workers would also translate into a better capacity to adapt and apply newtechniques. English wages and agricultural productivity were nearly twice those in France. We finda larger range of variation across French departments. Industrial wages in 1839-40 the highest paiddepartment were 3.2 times those in the lowest; while agricultural productivity in 1852 (measured asman hours to produce a hectolitre of wheat) in the most efficient department was 4.2 times that inthe lowest. As the maps in Figure 3 show, both are strongly correlated with height.

3.2 Nutrition.

Estimates of average nutrition in eighteenth century England vary widely. Fogel (2004) famouslyargued that English workers, by being better fed than their French counterparts, were capable of morework, and estimated that the median French worker consumed about 2200 kcal per day, considerablyless than a median English diet of about 2600 kcal. The amount of energy available for work (afterthe needs of basal metabolic demand) per capita in his estimate was about one-third higher inEngland than in France: 600 kcals in France in 1785, against 812 kcals in England in 1750 and 858kcals in 1800 (pp 9-11). The more recent calculations in Floud et al. (2011, pp. 99. ) are similar andput the English mean around 1800 at 2,456 kcal as opposed to the French mean of 1,847 (computed

17

from id., pp. 114–15); while Broadberry et al. (2011) estimate 2,100 kcal, more or less unchangedbetween the mid-thirteenth and mid-nineteenth centuries. At the other extreme, Muldrew (2011, p.156) estimates average calories per capita at 5,047 in 1770, falling to 3,977 in 1800, although theseestimates rely on implausibly high output of coarse grains. In the middle is Allen (2005) with anestimate of 3,800 kcal in 1750 falling to 2,900 in 1800.

To assess the plausibility of these estimates, we can consider the income elasticity of caloriedemand that they imply. Subramanian and Deaton (1996) estimate this elasticity at 0.3 to 0.5 forIndia, while Logan (2009) estimates it at 0.5 to 0.7 for late nineteenth century Britain. Assuming thatEnglish income in the late eighteenth century is 75 per cent higher than France, the Fogel and Floodet al finding that English calories were 25 per cent higher translates into an elasticity of one third,at the lower end of the Subramanian-Deaton range; while the Broadberry et al estimate is roughlyzero; while the Allen estimate that English caloric intake was 50-90 per cent higher translates intoan elasticity of two thirds to 1.2, at the upper end of the Logan range.

3.3 Life Expectancy.

English workers were not only taller and better nourished; they lived longer. Longer life expectancyreflects better nutritional and health status; and contributes to higher investment in human capabilityto the extent that parents are more likely to invest in their children if these had a better chance tosurvive. While it may be the case that high infant mortality shifted average health up by trimmingthe lower tail and “cleansing the weakest” it is far more likely that the process that killed the weakalso tended to weaken the survivors. Inflammations, which killed many children, also led to life-longreductions in height and increased morbidity (Crimmins and Finch, 2006).

Table 2 gives estimates of infant mortality and life expectancy for England and France, theEnglish data coming from Wrigley et al. (1997, 295, 224, 256, 291), and the French from Blayo(1975). It can be seen that expectation of life at birth in England was 36.4 years in the first half ofthe eighteenth century and 40.3 years in the second half; whereas in France in the 1740s it was about25 years; and between 1750 and 1789 around 28.1 years. Most of the English advantage was due tohigher survival rates of infants and children, but a smaller gap for those surviving to adulthood stillexists.

France’s high infant mortality reflected to some extent its lower standard of living andinferior diet. Matossian (1984) links higher French death rates to consumption of the wrong kind offood, whereas Fogel (2004) emphasizes the link between inadequate food consumption-hunger-and“premature death.” Some of the English advantage may have been due to longer breast-feeding ; andpossibly to a faster decline in smallpox due to the application of pre-Jenner inoculation techniques,especially after the adoption of improved methods by Robert Sutton in the 1760s Mokyr (2009, 285,244).

18

Table 2: Infant mortality and life expectancies in England and France during the eighteenth century

4 Revealed Comparative Advantage: Evidence from Labour Flows.

The implementation of new techniques required a high-quality labor force, but of the most essencewas a skilled and well-trained elite of technicians, engineers, mechanics, and similar personnel. Thatthe quality of highly-skilled English artisans was a decisive factor in its industrial success was theopinion of many contemporary commentators, summarized by Mokyr (2009, 107-118) andMeisenzahl and Mokyr (2012). For instance Jean-Baptiste Say noted in 1803 that “the enormouswealth of Britain is less owing to their own advances in scientific acquirements, high as she ranksin that department, as to the wonderful practical skills of her adventurers in the useful applicationof knowledge and the superiority of her workmen.” Josiah Tucker in 1758 wrote “the Number ofWorkmen [in Britain] and their greater Experience excite the higher Emulation, and cause them toexcel the Mechanics of other Countries in these Sorts of Manufactures.” Contemporary policy-makers clearly viewed highly skilled laborers as a source of comparative advantage, as witnessedby the laws prohibiting the emigration of artisans and exportation of machinery (neither of whichappear to have been particularly effective). Laws prohibiting the emigration of artisans and theexportation of machinery were first passed in 1696, and repeated through the eighteenth century, tobe repealed in 1824.

Decisive evidence on the relative quality of English workers comes from the direction oflabour migration. If the expensive English labour hypothesis were true, we would expect the flowto have been from France to England, in the form of unskilled workers taking advantage of higherEnglish wages. In fact, the flow was in the opposite direction, and composed of English and Scottishskilled artisans. Interestingly, this flow of artisans to France precedes the Industrial Revolution,

John Holker, an English mechanic and political refugee in France, set up a textile manufacturing plant in 175210

and, despite the risks as a Jacobite refugee, returned to recruit many of his skilled workers in Britain. By 1754 he

employed 20 English artisans who were allocated among French workers so that skills could be disseminated in the most

effective fashion (Henderson, 1954, 16; Harris, 1998, 60).

The paradigmatic figure here was Aaron Manby (1776-1850) who set up a large engineering works in11

Charenton that employed 200-250 Englishmen in the mid-1820s with the French providing only the manual labour

Henderson (1954, 54).

The great inventor Bryan Donkin noted that a worker in the paper industry who might have made 18-20 s. a12

week in Britain, was hired at 50s. in France. An engineer named Alexander Galloway felt that a person of similar

qualifications would make 22 s. in Paris and 36 s in London — but then added that English workmen in Paris would

make twice what the locals would make (2 guineas), indicating the difference in the perceived quality of the workmen

(ibid., 24). John Martineau testified similarly that a French blacksmith would make in France 4 francs a day, while an

English smith in Paris would make 10- 11 francs (ibid., 7).

Among the many Germans who came to Britain to acquire technical expertise, we can mention Wilhem von13

Reden, sent to study British coal mining techniques in 1776; Johann Gottfried Brügelmann who travelled to study

Arkwright’s famous Cromford mill in 1794, before setting up his own mill near Düsseldorf; F.A.J. Egells, a Westphalian

locksmith sent by the Prussian government to England in 1819 to study machinery engineering; and Jacob Mayer, who

worked for a time at Sheffield before opening a cast-steel mill near Cologne Henderson (1954, ch. 4).

19

implying that the advantage that England enjoyed in the area of technical competence predated itstechnological achievements. The Industrial Revolution strengthened this connection and, after10

1815, a large number of British technicians found their way to the Continent, where they installed,maintained, and managed new equipment and instructed local workers how to use it.11

Evidence that the mercantilist laws trying to protect this resource were effective is sparse,but they did result in a Parliamentary investigation that yielded a large quantity of anecdotal evidenceon the quality of British labour. Thus it was maintained that an English engineer, turner, or ironfounder, working in France, will make twice as much as a French one. “The English workmen, fromtheir better methods, do more work and better than the French...and though their wages are higher,yet their work does not cost more money in France than when done by Frenchmen, though theirwages are lower” Great Britain (1824, 106). The higher competence of English workers is thus12

confirmed by the flows of immigrants, as well as by the reverse flow of Continental engineers whocame to study with, or spy on, British engineers. 13

How large were the flows? Alexander estimated that in the years 1822 and 1823 alone,16,000 artisans moved from England to France (ibid., 108). This seems exaggerated, but a year laterGalloway estimated the stock of English workers in France at 15,000-20,000 workers Great Britain(1824, 37, 43).

5 Wages and Human Capability in Early Nineteenth Century France andEngland.

20

The strong correlation between wages, height and measures of human capability such as patents,literacy and school attendance can be seen within a cross-section of France during its own episodeof rapid industrialization, in the second quarter of the nineteenth century. Figure 3 shows thecorrelations across each of the 85 departments of mainland France of height and literacy ofconscripts, school enrolment, industrial employment, number of patents, urban population, the crudedeath rate, and per capita wheat consumption for the late 1820s, industrial wages from 1839-40, andagricultural productivity (man days to produce a hectolitre of wheat) for 1852. Details of thesevariables are given in the Appendix. It can be seen that most of these variables are stronglycorrelated, with the exception of health of army recruits and crude death rates.

21

In part, the negative correlation between height and fitness of conscripts reflects recruitmentquotas: in areas with many recruits rejected for short stature, the remainder would be declared fit forservice irrespective of health (Marshall, 1834). However, height is also positively correlated withcrude death rates and urbanization, consistent with the idea of Bozzoli, Deaton andQuintana-Domeque (2009) that in areas of high mortality, small infants die at a disproportionate rateleading the survivors to be taller on average.

While most variables are correlated, as the second panel of Figure 3 shows, they also showstrong spatial correlation: departments in northern and eastern France tend to have high levels ofproductivity, literacy, patents and so on, and central, southern and western departments low ones.There is therefore the possibility, typically neglected in economic analyses of cross-sectional data,that these correlations simply reflect similar latent characteristics of neighbouring regions, ratherthan true relationships between individual variables.

Table 3 gives regressions of agricultural productivity, industrial wages, literacy of conscripts,and life expectancy on a variety of covariates. We again emphasize that these do not purport to bestructural regressions: their purpose is to summarize correlations in the data. The first column ofeach gives standard OLS results. However carrying out a Moran test for spatial correlation ofresiduals, using a weighting matrix W where neighbours of each region are given equal weightswhich sum to one, shows strong spatial correlation in every case. The second column therefore givesa Kelejian and Prucha (2010) version of a Cliff-Ord spatial lag regression, implemented by Piras(2010), where:

(10)

and residuals follow

(11)

22

23

i iwhere ç is heteroskedastic ç ~ N(0, ó . We also estimated each regression (10) with the generalized2

residual structure of Kelejian and Prucha (2007) where, instead of the spatial AR1 in (11), residualsare required only to obey å = Rå + ç where R is a non-singular matrix. Estimating these regressions,using a variety of kernels to weigh the geographical distance between the centres of each departmentto estimate the covariance matrix, gave similar results to the Cliff-Ord model, and we do not reportthem here.

Starting with productivity, OLS suggests a strong association with height, industrialemployment, and, especially, number of patents. However, controlling for spatial autocorrelation,none of these variables has a large coeffcient or is statistically significant at conventional levels.Omitting all other variables, however, there remains a modest but significant relationship betweenheight and productivity. Looking at wages, OLS suggests a strong relationship with height (therelationship with the closely related literacy is slightly higher), patents, and urbanization, and theserelationships turn out to be robust to spatial correlation, although the strength of the effect diminishesin each case. Turning to literacy of conscripts in the late 1820s, we add life expectancy at birth (tocapture returns to investment in human capital) and the ratio of annual births to marriages (to see ifthere is any quantity-quality trade-off where areas with fewer births have greater investment ineducation). The OLS regressions show a strong association with height and patents only; butadjusting for spatial autocorrelation in the second column, patents no longer have a large orsignificant effect, while life expectancy has a modest but significant impact. Finally, looking at lifeexpectancy, only urbanization is significant in the spatial regression, with height, patents, andindustry being individually insignificant. Excluding patents and industry, the regression shows amodest relationship between height on life expectancy.

Similar data for Britain for the nineteenth century are harder to come by, but the little thereis confirms our hypothesis that there is a positive association between high wages and some measureof labor quality. One measure of human capital that seems to have withstood the test of time is anindex of age-heaping, which tends to be higher among less numerate and educated populations. Inthe table below we produce some cross-sectional results for England at the county level. As ourdependent variable we use the wage level at the county level as reported by Hunt (1986), thoughthese are agricultural wages. The independent variables are a variety of measures of “human quality.”One of them is the literacy rate by county adapted from convict data (Nicholas and Nicholas, 1992,p. 11); another are two measures of nineteenth century age-heaping from data generously providedto us by Professor Joachim Voth (see Baten, Crayen and Voth, 2012 for details.) We also utilize thecounty by country “quality of diet” developed recently by Horrell and Oxley (2012) and British armyheight data using the standard source based on the work of Floud, Wachter and Gregory. All thosedata are seriously flawed, yet they are consistent with the hypothesis that wages were associated witha higher “quality” of the average worker (although there is no possibility to disentangle the exactcausal relation with the data at hand).

24

Table 4: cross sectional correlations, England (s.e.’s in parentheses)

wage 1760 wage 1790 wage 1840

Height -3.78a

(4.02)6.92a

(5.07)6.48b

(5.56)

Nutrition -2.72c

(.903)1.71c

(1.14)1.41d

(1.36)

Whipple -.966(.41)

-.669(.514)

-1.59(.58)

Literacy -.05(.20)

.13(.25)

-.05(.27)

constant 472(276)

-295(348)

-149(402)

n 35 35 37

R .42 .30 .252

a 1788-1805 averageb 1824-44 averagec 1797d 1834

The results for the 1760 wage data are obviously weak, with both the height and the nutritionvariables having the wrong signs. For the 1790 and 1840 wages, the signs are more reasonable andperhaps most encouraging, the wages are thoroughly negatively correlated with the degree of age-heaping (which reflects to some degree numeracy education and to some degree innate cognitiveability). All in all, the county-level regressions need more work, and in particular a better measureof the dependent variable.

The traditional, negative view of European guilds is disputed by Epstein (1998) but defended by Ogilvie14

(2008).

25

5 English Institutions: Old Poor Law and Apprenticeship.

We have seen how England benefited from a self-reinforcing nexus of high wages and high labourcapability. Underlying this process were two social institutions unique to England: the Old PoorLaw, and an informal system of apprenticeship.

The idea that the English Poor Law, a unique institution, had some unintended positive effecton industrialization has been proposed before (Solar, 1995; Greif, Iyigun, and Sassoon, 2012).Themain argument made is that the Poor Law functioned as a social insurance scheme inducing peopleto take more risks than they would have otherwise. Starting in the early seventeenth century, Englishparishes were required to levy a property tax to fund local poor relief, which was directly largely tothe elderly and families with many small children. By the end of the seventeenth century, Poor Lawexpenditure was about 1 per cent of national income, sufficient to provide half subsistence for 10per cent of the population; and increased to around 2 per cent of national income by the end of theeighteenth century. Kelly and Ó Gráda (2011) argue that the weakening of the Malthusian positivecheck in the early seventeenth century was a result of this Old Poor Law, by noting that a strongpositive check endured for a century in London, despite its higher wages, where systematic poorrelief did not start until the 1720s; and that parishes with generous poor relief experienced weakerpositive checks in the eighteenth century than those with lower spending. As well as improvingliving standards, especially of children, directly, the Old Poor Law probably maintained higher livingstandards indirectly by acting as a brake on population growth. As equation (9) indicates, areasdominated by a few landowners, so called “closed parishes”, had a strong incentive to restrict thesupply of housing to minimise their liability for poor relief. In short, by being a progressive transfer,the Old Poor Law may have raised the nutritional standard of living of the median English person.,and thus contributed to the higher quality of the labor force.

The second source of English human capability lay in its system of professional trainingthrough apprenticeship: in 1700 over a quarter of males aged 21 had completed an apprenticeship(Mokyr, 2009, 118). As noted earlier, the English school system was not impressive by contemporarystandards. However, the decisive group during the Industrial Revolution was artisans, and nearly allartisans were trained as apprentices by other artisans. The question is why the English system ofapprenticeship worked better than elsewhere.

In her work on childhood labour and training, Humphries (2003; 2010, 282- 283) stressesthat, unlike much of the Continent, apprenticeship in England was not normally enforced andmonitored by a guild with coercive powers. Instead, it was largely a self-enforcing institution in14

De Vries has argued that the demand for consumer durables in the century before the Industrial Revolution15

shifted from an emphasis on the quality of the materials to an emphasis on workmanship (De Vries, 2008, p. 146).

26

a repeated-interaction framework, relying on the capability of local networks based on kin, religion,and personal connections to create reputation effects that made the majority of both masters andpupils cooperate at a reasonable level even when the contracts themselves were less than complete.

The 1563 Statute that formally prohibited craftsmen to carry out their trade withoutcompleting their apprenticeship was not uniformly enforced, and after its repeal in 1814,apprenticeship remained the main form for boys to acquire a professional training. Moreover, anexamination of a large sample of indentures (formal contracts between masters and apprentices)reveals a substantial increase in the number of apprentices in mechanical and machine-relatedoccupations in the early stages of the Industrial Revolution (Van der Beek, 2010). As Humphries(2010, 2) emphasizes, the Poor Law contributed substantially to the accumulation of human capital,through the funding of pauper apprenticeships. Contrary to common belief, for much of theeighteenth century these apprenticeships provided real human capital (especially non-cognitive skillssuch as docility and punctuality) to the children of the destitute who otherwise would have remainedunskilled, as well as providing labour to new factories in remote areas.

This system of producing human capital was adaptive and worked well as long as theimportance of formal schooling remained limited. It remained largely a private order institution, verymuch part of a British institutional structure that stood at the center of its success in the early stagesof the Industrial Revolution This institutional structure represents a “civil economy,” one in whichcooperative arrangements between individuals based on shared cultural norms and reputationmechanisms led to outcomes that elsewhere required direct state intervention.

Of course, it could be argued that eighteenth century England could only maintain institutionslike the Old Poor Law and an extensive apprenticeship system because it was a prosperous place,with continuous demand for the products of industries that generated a supply of new artisans.Among the industries of eighteenth century England that proved particularly important as sourcesof skilled craftsmen who drove the Industrial Revolution, Mokyr (2009, 114-115) highlights three:clock and instrument making (with particular contributions from Protestant Huguenots driven outof France); the shipping and shipbuilding industry; and coal mining with its demand for preciselymade pumps, and iron rails for moving carts. There was also an element of demand: by the earlyeighteenth century Britain had a substantial middle class consisting of such people as merchants,professionals, well-to-do farmers, and artisans. These “middling sort” consumers demanded luxuryconsumer durables that required a high level of precision skills: clocks, harpsichords, tapestries, andfine china- and tableware (Berg, 2005). This market helped create the cadres of craftsmen(themselves middle class), whose competence was essential if the innovative ideas of inventors wereactually to be realized and to work as designed. This background created the large stock of skilled15

craftsmen that gave Britain the unique ability to implement and improve technologies developedacross Europe that made her the leader of the Industrial Revolution.

27

7 Conclusions.

Against the widely accepted view that high wages induced the British industrial revolution as a wayof saving on labour, we show that after adjusting for productivity, English labor costs were no higherthan those in France. We argued instead, that England’s high wages and industrialization both flowedfrom a common source: the superior human capability of English workers. We have argued that thiscapability has two closely related dimensions: a physiological and a cognitive. We have also arguedthat while much of the literature still thinks of the Industrial Revolution as a stream of inventions,the crucial factor was the highly skilled labor that implemented it and the strong, disciplined anddocile workers who manned the machines.

The underlying idea is that technology, much like the performing arts, is an implementableform of knowledge: it takes one person to write the original, but if it is to be successful it needs tobe implemented by competent individuals, whose skills, typically, do not necessarily includecomparable creativity and originality. Britain and France both could count on a considerable supplyof original genius, but when it came to the skilled artisans needed to implement and operate the newtechniques and introduce incremental improvements to new technological ideas, England’sadvantage was decisive.

While we do not have data on the cognitive advantage of English workers in the eighteenthcentury, we do have systematic information on two closely associated variables: height and lifeexpectancy, both of which show that English children suffered from a less adverse developmentalenvironment than their French counterparts.

Appendix. Data Sources and Construction.

Excepting wages and productivity, all variables are taken from the tables in Angeville (1836) withcolumn numbers listed. All figures for military recruits are the average for 1825-1829; births,marriages, and deaths are average of 1825, 1826, 1828, 1830, 1832.

o Height: average height in cm of accepted conscripts. V37. o Literate: One minus percentage conscripts ignorant. V69. o Pupils: Number of schoolchildren per 1,000 inhabitants 1830-33. V71. o Industry. Percentage military recruits from industrial occupations. V84. o Patents. Number of patents per 1000 inhabitants 1829. V85. o Unfit. Percentage of recruits rejected for physical causes other than height. V43/ (1000 + V39+ V43). o Urban. Percentage of population in towns with over 1500 inhabitants 1831. V7. o Crude death rate: Estimated from V5 natural increase and V9, mean of the inverses of crudebirth and death rates. o Births per marriage: Ratio of births relative to male population aged 21 (V13) and marriages

28

relative to male population aged 21 (V15). o Wheat: Annual wheat consumption, hectolitres per 100 inhabitants, 1825-28. V129.

o Wage: Average industrial wage, 1839-40 used by Chanut et al. (1995) and kindly providedby Gilles Postel-Vinay. o Productivity: Wheat yield per hectare divided by man days per hectare, Enquete agricole 1852from Demonet (1990).

29

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