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New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on US Manufacturing

Author

Listed:
  • Martin Fiszbein
  • Jeanne Lafortune
  • Ethan G. Lewis
  • José Tessada

Abstract

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.

Suggested Citation

  • Martin Fiszbein & Jeanne Lafortune & Ethan G. Lewis & José Tessada, 2020. "New Technologies, Productivity, and Jobs: The (Heterogeneous) Effects of Electrification on US Manufacturing," NBER Working Papers 28076, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:28076
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    Cited by:

    1. Hashemi, Majid, 2021. "The economic value of unsupplied electricity: Evidence from Nepal," Energy Economics, Elsevier, vol. 95(C).

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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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