Factor prices and induced technical change in the industrial revolution

Using historical data for the 1700–1914 period, this paper analyses nature and direction of technical change in Britain. The evidence indicates that, over long labour-saving technology adoption was a major response to changes relative factor prices, thus supporting hypothesis that ‘induced innovation’ driver during British industrial revolution. Labour saving made possible sustained by capital-augmenting energy-augmenting coupled with continuous capital accumulation abundant energy supplies. This process placed economy on higher capital–labour ratio equilibrium, primary force driving productivity growth, which further raised wages living standards.