Agricultural Revolution and Industrialization

Chu, Angus C. and Peretto, Pietro and Wang, Xilin (2020): Agricultural Revolution and Industrialization.

Abstract

This study explores how agricultural technology affects the endogenous takeoff of an economy in the Schumpeterian growth model. Due to the subsistence requirement for agricultural consumption, an improvement in agricultural technology leads to a reallocation of labor from the agricultural sector to the industrial sector. Therefore, the agricultural improvement expands the firm size in the industrial sector, which determines the incentives for innovation and triggers an endogenous transition from stagnation to growth. Calibrating the model to US data for a quantitative analysis, we find that without the reallocation of labor from agriculture to the industrial sector in the early 19th century, the takeoff of the US economy would have been delayed by about four decades.

• Item Type: MPRA Paper
• Language: English
• Keywords: agricultural technology; endogenous takeoff; innovation; economic growth
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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