New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on Us Manufacturing

93 Pages Posted: 16 Nov 2020 Last revised: 20 Mar 2021

See all articles by Martin Fiszbein

Martin Fiszbein

Boston University - Department of Economics

Jeanne Lafortune

Pontifical Catholic University of Chile - Institute of Economics; IZA

Ethan G. Lewis

Dartmouth College - Department of Economics

José Tessada

Business School, Pontificia Universidad Católica

Date Written: November 2020

Abstract

We use city-industry data from 1890 to 1940 to identify the impact of electricity on manufacturing. We exploit cross-industry variation in pre-electricity energy intensity combined with geographic variation in proximity to early hydroelectric power plants. Labor productivity gains from the arrival of electricity were rapid and long-lasting. Electricity was labor-saving, induced capital deepening, and a hollowing out of the labor skills distribution. We document significant heterogeneity in electricity's effects: in sector-county pairs where the average firm was initially large, we find no significant expansion in employment, while in markets with relatively small firms, output and employment increased.

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Suggested Citation

Fiszbein, Martin and Lafortune, Jeanne and Lewis, Ethan G. and Tessada, Jose, New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on Us Manufacturing (November 2020). NBER Working Paper No. w28076, Available at SSRN: https://ssrn.com/abstract=3731245

Martin Fiszbein (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

Jeanne Lafortune

Pontifical Catholic University of Chile - Institute of Economics ( email )

Casilla 76
Correo 17
Santiago
Chile

IZA ( email )

Ethan G. Lewis

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

Jose Tessada

Business School, Pontificia Universidad Católica ( email )

Vicuna Mackenna 4860
Santiago
Chile

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