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Business Dynamism and Innovation: Evidence from Novel 19th-Century Microdata

Author

Listed:
  • Antonin Bergeaud

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Ruveyda Nur Gozen

    (Cardiff University)

  • Suleyman Gozen

    (University of Bristol [Bristol])

Abstract

We construct a novel establishment-level dataset combining the nineteenth-century U.S. Census of Manufactures (1850-1880) with patent records from CUSP to examine how innovation shaped firm performance in early industrial America. Patenting establishments were substantially larger than comparable non-patenters across all dimensions (employment, capital, output, and output per worker) with premia further amplified among firms that produced breakthrough inventions. Estimating establishment-level production functions using Levinsohn-Petrin approach, we find that patenting is associated with higher revenue total factor productivity (TFPR) while leaving markups unchanged on average. Breakthrough innovations, however, are associated with gains on both margins, with a size decomposition revealing the strongest amplification among the largest establishments, consistent with superstar dynamics, yet small breakthrough innovators also capture meaningful gains, suggesting the returns to invention were not exclusive to large firms.

Suggested Citation

  • Antonin Bergeaud & Ruveyda Nur Gozen & Suleyman Gozen, 2026. "Business Dynamism and Innovation: Evidence from Novel 19th-Century Microdata," Working Papers hal-05730445, HAL.
    • Handle: RePEc:hal:wpaper:hal-05730445
    DOI: 10.2139/ssrn.7144078
    as

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