Demographic transition and industrial revolution: A macroeconomic investigation

All industrialized countries have experienced a transition from high birth rates, land-based production and stagnant standards of living to low birth rates and sustained income growth. To develop a better understanding of these economic and demographic transformations and the link between them, we construct a general equilibrium framework merging the Hansen and Prescott [Hansen, Gary D., Prescott, Edward C., 2002. Malthus to Solow. American Economic Review 92 (4), 1205–1217] model of structural change with the Barro and Becker [Barro, Robert J., Becker, Gary S., 1989. Fertility choice in a model of economic growth. Econometrica 57 (2), 481–501] model of fertility choice. We find that when the historical changes of youth mortality and sector-specific productivity are introduced into the model, parameterized to capture key moments of 17th century England, it does remarkably well at generating the long-run features of economic and demographic development of England.