How Substitutable are Fixed Factors in Production? Evidence from Pre-industrial England

Wilde, Joshua (2012): How Substitutable are Fixed Factors in Production? Evidence from Pre-industrial England.

Abstract

Whether fixed factors such as land constrain per-capita income growth depends crucially on two variables: the substitutability of fixed factors in production, and the extent to which innovation is biased towards land-saving technologies. This paper attempts to quantify both. Using the timing of plague epidemics as an instrument for labor supply, I estimate the elasticity of substitution between fixed and non-fixed factors in pre-industrial England to be significantly less than one. In addition, I find evidence that denser populations – and hence higher land scarcity – induced innovation towards land-saving technologies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Land, Industrial Revolution, Induced Innovation, Fixed Factors, Substitutability, Population, England, Plagues
• Subjects: J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N13 - Europe: Pre-1913; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q24 - Land; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N53 - Europe: Pre-1913; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General; N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy > N33 - Europe: Pre-1913; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q15 - Land Ownership and Tenure ; Land Reform ; Land Use ; Irrigation ; Agriculture and Environment; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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