Flexible Supply of Apprenticeship in the British Industrial Revolution

In this paper we explore the response of the supply of human capital to changes in demand in the British Industrial Revolution. We use annual information from the Stamp Tax registers on apprentices in England between 1710-1805 and examine the response of tuitions to changes in the annual number of apprentices employing two methods, a two stage instrumental variable procedure to estimate a static market system and a Vector Autoregression framework (VAR) to test the short-run and long-run responses. Our findings show that the standard supply elasticity was high in the sense that the tuition increased only slightly in response to increases in the number of apprentices and that tuitions rose in the short run while returning to their equilibrium level in the long run. Furthermore, we find that this efficiency was characteristic of the system as a whole and not particular to specific trades. These findings underpin the belief that effectiveness and adaptability of the British economy in supplying highly skilled workers played an important role in the Industrial Revolution.