New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on US Manufacturing
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.
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, and the Bulletin on Health — as well as online conference reports, video lectures, and interviews.
