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Modern Growth

Explore the profound shift from agriculture to industry, the Industrial Revolution's impact on productivity, income disparities, and urbanization, underscoring the enigmatic nature of modern economic growth. Discover historical contexts and equations shaping human capital's role in growth dynamics.

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Modern Growth

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  1. Modern Growth Chapter 10

  2. Finally, we escaped

  3. Mislabeling history • Most observable changes: industrial sector • 70%-80% of the population in agriculture • Nothing really industrial about the IR • Agricultural productivity increased as much as the rest of the economy

  4. Modern growth • Growth in income per person ca. 1860s (IR ca. 1760 in England) • Gap between rich and poor economies: • 40:1 • Income per capita in England: • 10-fold (1260-2000) • Decrease in population in agriculture: • 50%-80% in preindustrial times • 2.1% in the US today • 3% in France today • Changes in social life: • Increase in urbanization

  5. Why modern economic growth is so puzzling! • Long persistence of the Malthusian trap • The escape was the IR in the last 200 years • Living standards in Third World countries as low as in most countries pre-1800 (or worse)

  6. Complexity & Simplicity • Explaining growth with a single equation:

  7. Adding human capital

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