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Firm Heterogeneity, Technological Adoption, and Urbanization: Theory and Measurement

Alex Chernoff

Staff Working Papers from Bank of Canada

Abstract: This paper develops a model of firm heterogeneity, technological adoption, and urbanization. In the model, welfare is measured by household real income, and urbanization is measured by population density. I use the model to derive statistics that measure the effect of a new technology on productivity, welfare, and urbanization. The empirical application of the paper estimates these effects using nineteenth-century firmlevel data on mechanical steam power in the Canadian manufacturing sector, and townshiplevel population data. The results indicate that the introduction of steam power increased productivity by 22.8 percent, and welfare by 6.0 percent. By comparing the model predicted change in urbanization to observed population density growth, I find that the introduction of mechanical steam power accounts for approximately 6.2 percent of the observed variation in urbanization during this period.

Keywords: Economic models; Productivity; Regional economic developments (search for similar items in EconPapers)
JEL-codes: N61 O14 R13 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2017
New Economics Papers: this item is included in nep-eff, nep-geo and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:17-27

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