How skilled were Lancashire cotton factory workers in 1833
Economic historians have long been divided over whether the industrial revolution led to an increase of skill among the factory workforce.2 One reason for this continuing disagreement is that the process of skill formation is difficult to observe directly. Historians have thus tried to identify changes in the stock of skills available from changes in levels of illiteracy, or from the proportion of the workforce completing apprenticeships. Neither measure indicates skill formation accurately. Industrialization may have called for a more adaptable and eventually a more literate workforce, but until the i830s changes in rates of literacy in Britain, as well as their links to the process of industrialization, are uncertain both in direction and in pace.3 Similarly, apprenticeships are a poor guide to the amount of on-the-job training in the industrial revolution. By the end of the eighteenth century, laws governing apprenticeships were widely regarded as anachronistic.4 In practice they were abused or ignored by employers, or if upheld were used mainly as a barrier (especially against females) to entry into skilled trades, rather than as a vehicle for training labour.5 An alternative approach suggested by human capital theory is to measure skills formation through observing the lifetime earnings profiles of workers. The basic idea behind human capital theory is that people enhance their earning capabilities by investing in themselves (i.e. by creating human capital) in much the same way that earnings may be increased by investing in physical capital.6 The simplest way to think about human capital is that it is the quality of labour or the set of skills (though human capital includes much more than skills) which enables a worker to perform at a higher standard. The opportunity cost of acquiring these skills may be seen as investment, in that the time spent training could have been used in paid