Full Citation

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

Citation Type: Working Paper

Publication Year: 2022

ISBN:

ISSN: 1556-5068

DOI: 10.3386/W28076

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Abstract: We use a rich data set at the city-industry level from 1890 to 1940 to identify the impact of electricity on manufacturing industries. We exploit cross-industry variation in energy use intensity before the arrival of electricity combined with geographic variation in proximity to early hydroelectric power plants. Contrary to the existing narrative, we find that labor productivity gains from electricity measured through this strategy were relatively rapid and long-lasting. Cheaper energy thanks to hydroelectricity is partially responsible but firms also appear to have changed their production process relatively quickly. The source of the impact of electricity on productivity varies with the degree of product market structure: in sector-county pairs where the average firm was initially large, productivity increased without significant expansion in employment, while in markets with relatively small firms, both output and employment increased.

Url: https://www.nber.org/papers/w28076

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Authors: Fiszbein, Martin; Lafortune, Jeanne; Lewis, Ethan G.; Tessada, José

Series Title: NBER Working Paper Series

Publication Number: 28076

Institution: National Bureau of Economic Research

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Publisher Location:

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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