Market forces shaping human capital in eighteenth‐century London

This article draws on quantitative and descriptive data from R obert C ampbell's manual for prospective apprentices, The L ondon tradesman (1747), to demonstrate the responsiveness of apprenticeship premiums in mid‐eighteenth‐century London to market forces of supply and demand. It first shows that C ampbell's data on mid‐eighteenth‐century journeymen wages, apprenticeship premiums, and masters’ set‐up costs in L ondon are consistent with other sources. It then applies instrumental variable regressions to estimate the elasticity of apprenticeship premiums with respect to journeymen wages and set‐up costs, using C ampbell's education and ability requirements by trade to instrument for wages. We find an elasticity of one with respect to wages, and of 0.25 with respect to set‐up costs, both statistically significant at a p ‐value less than 0.1%. We interpret these findings as supporting the thesis that apprenticeship played an important role in adapting the E nglish workforce to the skill requirements of the industrial revolution in its early stages, insofar as the institution of apprenticeship in L ondon was representative of other parts of E ngland. Furthermore, by demonstrating the internal and external consistency of C ampbell's observations, our findings should encourage their use as an unparalleled source of detailed, trade‐specific wage data from the early years of the industrial revolution.