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Title: Turbulence and Inequality from Steel Innovation

Citation Type: Working Paper

Publication Year: 2004

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Abstract: Iron and steel production grew dramatically in the U.S. when mass production technologies for steel were adopted in the 1860s. According to new measures presented in this study, earnings inequality rose within the iron and steel industries in the 1870s. The paper examines technological uncertainty and skill bias hypotheses about how technological change affects earnings inequality in the light of historical evidence about this period. Firms made a variety of technological choices and for the first time undertook research and development. New professional associations and journals appeared for mechanical engineers and chemists. Industrial unions replaced craft unions. As new ore sources and cheap water transportation were introduced, new plants along the Great Lakes outcompeted existing plants elsewhere. New iron and steel plants in the 1870s were larger than any U.S. plants had ever been, and different management approaches such as cost accounting were developed. A national market replaced local markets for iron and steel. Based on the evidence, technological uncertainty explained the rise in inequality better than skill bias.

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Authors: Meyer, Peter

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Institution: Bureau of Labor Statistics

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Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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