Whether fixed factors such as land constrain per-capita income growth depends crucially on two variables: the substitutability of fixed factors in production, and the extent to which innovation is biased towards land-saving technologies. This paper attempts to quantify both. Using the timing of plague epidemics as an instrument for labor supply, I estimate the elasticity of substitution between fixed and non-fixed factors in pre-industrial England to be significantly less than one. In addition, I find evidence that denser populations – and hence higher land scarcity – induced innovation towards land-saving technologies.
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