More Machines, Better Machines...Or Better Workers?
49 Pages Posted: 11 Nov 2008 Last revised: 17 Jan 2015
Date Written: June 1, 2009
How much of the rapid growth in labor productivity in nineteenth century cotton weaving arose from capital-labor substitution and how much from technical change? Using an engineering production function and detailed information on inventions, I find that factor substitution accounts for little growth. However, much of the growth and most of the apparent labor-saving bias arose not from inventions, but from improved labor quality — better workers spent less time monitoring the looms. The inventions themselves were almost technically neutral because innovations in general purpose technologies were capital-saving. Labor quality played a critical role in the persistent association between economic growth and capital deepening in this important sector.
Keywords: technical change, productivity growth, technical bias, innovation, US manufacturing history, general purpose technologies
JEL Classification: O33, O47, N61, N11
Suggested Citation: Suggested Citation