Is industrialization conducive for economic development in the long-run? Exploiting exogenous variation in the diffusion of steam engines across 19th century France, the research suggests that early industrialization has had an adverse effect on long-run prosperity, stemming from the negative impact of the adoption of unskilled-labor-intensive technologies in early stages of industrialization on contemporary levels of human capital and thus the incentive to adopt skill-intensive technologies. The research suggests that characteristics that enabled the onset of industrialization, rather than industrial technology per se, have been the source of prosperity among developed economies that experienced earlier industrialization.
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The authors are grateful to the editor (Yuriy Gorodnichenko), Daron Acemoglu, Philippe Aghion, Josh Angrist, Emily Blanchard, Francesco Caselli, Eve Colson-Sihra, Martin Fiszbein, Marc Klemp, Tommaso Porzio, Jesse Shapiro, Uwe Sunde and David Weil for helpful discussions and participants in seminars and conferences at Ben Gurion University, Brown, Clemson, Haifa, Hebrew University, MIT, UC Merced, the Israel Economic Association, the NBER Meeting of Macroeconomics Across Time and Space, May 2018, and the NBER SI Economic Growth Meeting, July 2018, for useful comments. We thank Guillaume Daudin, Alan Fernihough and Ömer Özak for sharing their data with us. Raphaël Franck wrote part of this paper as Marie Curie Fellow at the Department of Economics at Brown University under funding from the People Programme (Marie Curie Actions) of the European Union's Seventh Framework Programme (FP 2007–2013) under REA Grant agreement PIOF-GA-2012-327760 (TCDOFT).
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- Cultural inertia
- Economic growth
- Human capital
- Steam engine