TY  - JOUR
AU  - Atack,Jeremy
AU  - Bateman,Fred
AU  - Margo,Robert A.
TI  - Capital Deepening in American Manufacturing, 1850-1880
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9923
PY  - 2003
Y2  - August 2003
UR  - http://www.nber.org/papers/w9923
L1  - http://www.nber.org/papers/w9923.pdf
N1  - Author contact info:
Jeremy Atack
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615-343-2467
Fax: 615/343-8495
E-Mail: jeremy.atack@vanderbilt.edu

Fred Bateman
Department of Economics
Brooks Hall
University of Georgia
Athens, GA  30602-6254
E-Mail: fbateman@terry.uga.edu

Robert A. Margo
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-6819
Fax: 617/343-8495
E-Mail: margora@bu.edu
AB  - We use establishment-level data to study capital deepening -- increases in the capital-output ratio -- in American manufacturing from 1850 to 1880. In nominal terms, the aggregate capital-output ratio in our samples rose by 30 percent from 1850 to 1880. Growth in real terms was considerably greater -- 70 percent -- because prices of capital goods declined relative to output prices. Cross-sectional regressions suggest that capital deepening was especially importnat in the larger firms and was positively associated with the diffusion of steam-powered machinery. However, even after accounting for shifts over time in such factors, much of the capital deepening remains to be explained. Although capital deepening implies a fall in the average product of capital it does not necessarily imply that rates of return were declining. However, we find strong evidence that returns did decline. We also show that returns were decreasing in firm size, although the data are not sufficiently informative to tell us why it was so.
ER  -