IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/21435.html
   My bibliography  Save this paper

People and Machines: A Look at the Evolving Relationship Between Capital and Skill In Manufacturing 1860-1930 Using Immigration Shocks

Author

Listed:
  • Jeanne Lafortune
  • José Tessada
  • Ethan Lewis

Abstract

This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.

Suggested Citation

  • Jeanne Lafortune & José Tessada & Ethan Lewis, 2015. "People and Machines: A Look at the Evolving Relationship Between Capital and Skill In Manufacturing 1860-1930 Using Immigration Shocks," NBER Working Papers 21435, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21435
    Note: DAE LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w21435.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Harry Jerome, 1934. "Changes in Mechanization: Non-Manufacturing Industries," NBER Chapters, in: Mechanization in Industry, pages 120-178, National Bureau of Economic Research, Inc.
    2. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    3. Jeanne Lafortune & José Tessada, 2012. "Smooth(er) Landing? The Dynamic Role of Networks in the Location and Occupational Choice of Immigrants," Working Papers ClioLab 14, EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile.
    4. James, John A. & Skinner, Jonathan S., 1985. "The Resolution of the Labor-Scarcity Paradox," The Journal of Economic History, Cambridge University Press, vol. 45(3), pages 513-540, September.
    5. Harry Jerome, 1934. "Changes in Mechanization in Selected Manufacturing Industries," NBER Chapters, in: Mechanization in Industry, pages 55-119, National Bureau of Economic Research, Inc.
    6. Paul Beaudry & David A. Green, 2003. "Wages and Employment in the United States and Germany: What Explains the Differences?," American Economic Review, American Economic Association, vol. 93(3), pages 573-602, June.
    7. Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 69-113, January.
    8. Lawrence F. Katz & Robert A. Margo, 2014. "Technical Change and the Relative Demand for Skilled Labor: The United States in Historical Perspective," NBER Chapters, in: Human Capital in History: The American Record, pages 15-57, National Bureau of Economic Research, Inc.
    9. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    10. Gray, Rowena, 2013. "Taking technology to task: The skill content of technological change in early twentieth century United States," Explorations in Economic History, Elsevier, vol. 50(3), pages 351-367.
    11. Harry Jerome, 1934. "Mechanization in Industry," NBER Books, National Bureau of Economic Research, Inc, number jero34-1, March.
    12. Wooldridge, Jeffrey M., 1997. "On two stage least squares estimation of the average treatment effect in a random coefficient model," Economics Letters, Elsevier, vol. 56(2), pages 129-133, October.
    13. Daniel S. Hamermesh, 1993. "Labor Demand and the Source of Adjustment Costs," NBER Working Papers 4394, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gray, Rowena & Montresor, Giulia & Wright, Greg C., 2020. "Processing immigration shocks: Firm responses on the innovation margin," Journal of International Economics, Elsevier, vol. 126(C).
    2. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    3. Youssef Benzarti & Jarkko Harju, 2020. "Using Payroll Tax Variation to Unpack the Black Box of Firm-Level Production," NBER Working Papers 26640, National Bureau of Economic Research, Inc.
    4. Morales, Juan S., 2018. "The impact of internal displacement on destination communities: Evidence from the Colombian conflict," Journal of Development Economics, Elsevier, vol. 131(C), pages 132-150.
    5. Andersson, David & Karadja, Mounir & Prawitz, Erik, 2020. "Mass Migration and Technological Change," SocArXiv 74ub8, Center for Open Science.
    6. Kirk Doran & Chungeun Yoon, 2019. "Immigration and Invention: Does Language Matter?," NBER Chapters, in: The Roles of Immigrants and Foreign Students in US Science, Innovation, and Entrepreneurship, pages 123-145, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xie, Bin, 2017. "The Effects of Immigration Quotas on Wages, the Great Black Migration, and Industrial Development," IZA Discussion Papers 11214, Institute of Labor Economics (IZA).
    2. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 693-732.
    3. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
    4. Miguel Morin, 2015. "The Labor Market Consequences of Electricity Adoption: Concrete Evidence from the Great Depression," Cambridge Working Papers in Economics 1554, Faculty of Economics, University of Cambridge.
    5. Giovanni Peri & Kevin Shih & Chad Sparber, 2016. "STEM Workers, H-1B Visas, and Productivity in US Cities," World Scientific Book Chapters, in: The Economics of International Migration, chapter 9, pages 277-307, World Scientific Publishing Co. Pte. Ltd..
    6. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    7. Ben S. Bernanke & James Powell, 1986. "The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Prewar and Postwar Eras," NBER Chapters, in: The American Business Cycle: Continuity and Change, pages 583-638, National Bureau of Economic Research, Inc.
    8. Gray, Rowena, 2013. "Taking technology to task: The skill content of technological change in early twentieth century United States," Explorations in Economic History, Elsevier, vol. 50(3), pages 351-367.
    9. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2016. "Productivity Trends in Advanced Countries between 1890 and 2012," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 420-444, September.
    10. Ortega, Javier & Verdugo, Gregory, 2016. "Moving Up or Down? Immigration and the Selection of Natives across Occupations and Locations," IZA Discussion Papers 10303, Institute of Labor Economics (IZA).
    11. Ward, Zachary, 2017. "Birds of passage: Return migration, self-selection and immigration quotas," Explorations in Economic History, Elsevier, vol. 64(C), pages 37-52.
    12. Todd Schoellman, 2010. "The Occupations and Human Capital of U.S. Immigrants," Journal of Human Capital, University of Chicago Press, vol. 4(1), pages 1-34.
    13. Aránzazu Guillán Montero & David Le Blanc, 2019. "Lessons for Today from Past Periods of Rapid Technological Change," Working Papers 158, United Nations, Department of Economics and Social Affairs.
    14. Gérard Duménil & Mark Glick & José Rangel, 1984. "La baisse de la rentabilité aux États-Unis : inventaire de recherches et mise en perspective historique," Revue de l'OFCE, Programme National Persée, vol. 6(1), pages 69-92.
    15. Ortega, J. & Verdugo, G., 2015. "The Impact of Immigration on the Local Labor Market Outcomes of Blue Collar Workers: Panel Data Evidence," Working Papers 15/07, Department of Economics, City University London.
    16. Chletsos Michael & Roupakias Stelios, 2019. "Do Immigrants Compete with Natives in the Greek Labour Market? Evidence from the Skill-Cell Approach before and during the Great Recession," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-30, April.
    17. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2014. "The Impact of Internal Migration on Local Labour Markets in Thailand," Working Papers 2014-71, Department of Research, Ipag Business School.
    18. Gordon Hanson & Chen Liu & Craig McIntosh, 2017. "The Rise and Fall of U.S. Low-Skilled Immigration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 83-168.
    19. Naguib, Costanza, 2019. "Estimating the Heterogeneous Impact of the Free Movement of Persons on Relative Wage Mobility," Economics Working Paper Series 1903, University of St. Gallen, School of Economics and Political Science.
    20. Brücker, Herbert & Hauptmann, Andreas & Jahn, Elke J. & Upward, Richard, 2014. "Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK," European Economic Review, Elsevier, vol. 66(C), pages 205-225.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:21435. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.