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

Jeanne Lafortune, José Tessada and Ethan Lewis

No 21435, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: J24 N61 O33 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-ger, nep-his, nep-lma and nep-mig
Note: DAE LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Jeanne Lafortune & Ethan Lewis & José Tessada, 2019. "People and Machines: A Look at the Evolving Relationship between Capital and Skill in Manufacturing, 1860–1930, Using Immigration Shocks," The Review of Economics and Statistics, vol 101(1), pages 30-43.

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Related works:
Journal Article: People and Machines: A Look at the Evolving Relationship between Capital and Skill in Manufacturing, 1860–1930, Using Immigration Shocks (2019)
Working Paper: People and Machines A Look at the Evolving Relationship Between Capital and Skill In Manufacturing 1860-1930 Using Immigration Shocks (2015)
Working Paper: People and Machines: A Look at the Evolving Relationship Between Capital and Skill in Manufacturing 1860-1930 Using Immigration Shocks (2015)
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