Smithian growth in Britain before the Industrial Revolution, 1500-1800

Chilosi, David ORCID: 0000-0002-2251-0381, Lecce, Giampaolo and Wallis, Patrick ORCID: 0000-0003-1434-515X (2025) Smithian growth in Britain before the Industrial Revolution, 1500-1800. Economic History Working Papers (382). London School of Economics and Political Science, London, UK.

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Abstract

Adam Smith’s claim that the division of labour is one of the major engines of economic growth is a foundational concept in economics. Despite this, we lack measures of the scale and growth of Smithian specialisation over the long run. This paper introduces a novel method based on job titles to measure specialisation. We apply this method to document patterns of Smithian specialisation in early modern Britain. National trends in specialisation were closely associated with economic growth. By 1800, the division of labour was over two and a half times as advanced as in the early sixteenth century, with particularly marked changes within English manufacturing, especially in the mechanical subsector, and, to a lesser extent, services. Specialisation was far less advanced in Wales and Scotland. We study several possible explanations for this change with an IV panel analysis. We find that this significant increase in the division of labour was mostly driven by the growth of the domestic market, in line with Adam Smith’s predictions. Intensive specialisation was concentrated in Middlesex and was helped by a supply factor, Marshallian externalities. Finally, we explore the connection between Smithian Growth and the Industrial Revolution. We find that early specialisation did not lead to later industrial success. Like Adam Smith himself, Smithian specialisation did not predict the Industrial Revolution.

Item Type:	Monograph (Working Paper)
Official URL:	https://www.lse.ac.uk/Economic-History/Working-Pap...
Additional Information:	© 2025 The Authors
Divisions:	Economic History
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor D History General and Old World > DA Great Britain
JEL classification:	N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N13 - Europe: Pre-1913 O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J21 - Labor Force and Employment, Size, and Structure
Date Deposited:	17 Jul 2025 08:24
Last Modified:	17 Jul 2025 08:33
URI:	http://eprints.lse.ac.uk/id/eprint/128849

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