Powering Up Productivity: The Effects of Electrification on U.S. Manufacturing

Martin Fiszbein, Jeanne Lafortune, Ethan Lewis and José Tessada

No 28076, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use 1890-1940 sector-county level data to identify the impact of electricity on manufacturing industries, exploiting pre-electrification variation in energy intensity across industries combined with variation across locations in proximity to early hydroelectric power plants. We find that labor productivity gains from electricity were rapid and long-lasting, in contrast with established narratives. Electrification was quickly accompanied by capital deepening and organizational changes that may have contributed to these gains. Impacts varied with market structure: productivity increased without expanding employment in sector-county cells with large initial firm size, while, in contrast, both output and employment increased in cells with small initial firm size.

JEL-codes: J24 L11 O33 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-eff, nep-ene, nep-his, nep-lma, nep-reg and nep-tid
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