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The impact of mechanisation on wages and employment: evidence from the diffusion of steam power

Author

Listed:
  • Weisdorf, Jacob
  • Ridolfi, Leonardo
  • Salvo, Carla

Abstract

Is mechanisation labour displacing? We use two all-inclusive industrial censuses from 19th-century France to examine the effect on wages and employment of one of the greatest waves of mechanisation in history: the diffusion of steam power. Many and costly workers were positively associated with the later adoption of steam. This suggests that mechanisation intended to save on the labour bill. But after controlling for selection effects, our diff-in-diff analysis shows that steam-adopting industries ended up employing both more and better-paid workers on average than their non-steam-adopting counterparts. This disputes the widespread view that past mechanisations entailed technical unemployment and falling labour compensation.

Suggested Citation

  • Weisdorf, Jacob & Ridolfi, Leonardo & Salvo, Carla, 2022. "The impact of mechanisation on wages and employment: evidence from the diffusion of steam power," CEPR Discussion Papers 17389, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17389
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    More about this item

    Keywords

    Employment; Health; Human capital; Industrialisation; Innovation; Labour; Motive power; Wages;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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