Economic Growth and Development

working for shorter hours, in contrast with much of the nineteenth century
when growth was based on accumulating more factors of production. Recall
from the Introduction the debates about the role of ‘labour’ in driving the
Industrial Revolution in England. This story also agrees with the Solow
theory that growth in high-income countries tends to be based on productiv-
ity increase rather than factor accumulation. Table 2.3 shows that in the UK,
US and Japan hours worked per head of population increased significantly in
the early nineteenth century but declined after 1870 and especially after
1913.
Falling working hours were accompanied by rising average years of educa-
tion per person employed, though at a slower pace over time: in the UK from
an average of 2 years of education per person employed in 1820 to 4.44 in
1870,10.6 in 1950 and 15.79 in 2003; in the US from 1.75 to 3.92, to 11.27 and
20.77; and in Japan from 1.50 to 1.50, to 9.11 and 16.78 (Maddison,
2007:305). The quality of the labour force, as we saw in the Introduction,
played but a small part in the early stages of the Industrial Revolution in
England.
There were dramatic increases in the gross stock of machinery and equip-
ment per capita, especially in Japan (a 25-fold expansion between 1950 and
2003). In the US (five-fold) and the UK (seven-fold) the growth of the capital
stock was much slower, which in part reflected lower investment rates and an
earlier shift than Japan away from an industrial to a service-based economy
which is less dependent on investment in physical machinery and equipment to
sustain output growth (Maddison, 2007:305).
Table 2.4 shows that shorter working hours, better education and more capi-
tal equipment contributed to a massive increase in labour productivity meas-
ured in terms of GDP per hours worked: between 1950 and 1973 a doubling in
the US and UK and a six-fold increase in Japan; and in the thirty years to 2003
another doubling in all three.
Table 2.5 divides the world economy after 1945 into two spells, the ‘golden
age’ prior to 1973 and the twenty years that followed. The contribution of
labour inputs to growth was consistently higher in the US than other developed

56 Sources of Growth in the Modern World Economy since 1950

Table 2.3 Hours worked in now-developed countries, 1870–1998

UK US Japan

Hours worked per person employed

1870 2,984 2,964 2,945

1913 2,624 2,605 2,588

1950 1,958 1,867 2,166

1973 1,688 1,594 2,042

1998 1,489 1,610 1,758

Source: Data compiled from Maddison (2006:347).