Working Paper: CEPR ID: DP14970
Authors: Rka Juhsz; Mara Squicciarini; Nico Voigtlnder
Abstract: New technologies tend to be adopted slowly and - even after being adopted - take time to be reflected in higher aggregate productivity. One prominent explanation for these patterns is the need to reorganize production, which often goes hand-in-hand with major technological breakthroughs. We study a unique setting that allows us to examine the empirical relevance of this explanation: the adoption of mechanized cotton spinning during the First Industrial Revolution in France. The new technology required reorganizing production by moving workers from their homes to the newly-formed factories. Using a novel hand-collected plant-level dataset from French archival sources, we show that productivity growth in mechanized cotton spinning was driven by the disappearance of plants in the lower tail - in contrast to other sectors that did not need to reorganize when new technologies were introduced. We provide evidence that this was driven by the need to learn about optimal ways of organizing production. This process of ‘trial and error’ led to initially low and widely dispersed productivity, and - in the subsequent decades - to high productivity growth as knowledge diffused through the economy and new entrants adopted improved methods of organizing production.
Keywords: industrialization; technology adoption; firm productivity
JEL Codes: F63; O14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Adoption of mechanized cotton spinning (O14) | Productivity growth (O49) |
| Disappearance of plants in lower tail of productivity distribution (D39) | Productivity growth in mechanized cotton spinning (O49) |
| Organizational challenges (L29) | Initial low productivity levels (O49) |
| Learning optimal production organization (L23) | Convergence towards higher productivity levels (O47) |
| Productivity growth in mechanized cotton spinning (O49) | Not uniformly distributed across productivity spectrum (D39) |