Labor Market Conflict and Technical Change: The Political Economy of Innovation in the Industrial Revolution"

Abstract:

We study conflict in the labor market as a factor driving technical change. The legalization of unions was an exogenous shock to the cost of conflict in the Industrial Revolution. We investigate how this shock impacted technology and labor markets. The impact concentrated in the textiles industry, which pioneered the mechanized factory, was differentially exposed to labor conflict, and drove modern growth. After unions were legalized, patenting increased significantly in textiles, especially for high quality invention; strikes drove increases in textiles invention; and the direction and bias of technical change shifted towards unskilled, non-union labor, including female and child labor.