Post-Malthusian Population Model of the British Industrial Revolution in a Lewis Unlimited Supply of Labor Model

Abstract

To explain the post-Malthusian population equilibrium of the British Industrial Revolution, this study proposes a two-sector economy that produces both agricultural foods and manufacturing goods. A Lewis model is used to discuss the interrelations among population increase, capital accumulation, and structural change of the British economy in the 19th century. We place capital accumulation at the center of the model to explain the growth in population size. Structural changes in the economy that are induced by capital accumulation favor the employment of labor in the manufacturing sector and trigger population increase. We examine this hypothesis by applying Granger causality tests to such variables as population size, capital accumulation, trade volume, and structural change in the British economy during the Industrial Revolution.