Technology Adoption and Productivity Growth During the Industrial Revolution: Evidence from France
65 Pages Posted: 10 Jan 2020
Date Written: December 20, 2019
We construct a novel dataset to examine the process of technology adoption during a period of rapid technological change: The diffusion of mechanized cotton spinning during the Industrial Revolution in France. We exploit a key feature of the setting that allows us to isolate the productivity distribution of the adopters of new technology: Before mechanization, cotton spinning was performed in households, while production in firms only emerged with the new technology around 1800. We contrast the evolution of the productivity distribution for mechanized cotton spinners to two comparison sectors -- metallurgy and paper milling. We document several stylized facts that can explain the well-documented puzzle that major technological breakthroughs tend to be adopted slowly across firms and -- even after being adopted -- take time to be reflected in higher aggregate productivity: Relative to the comparison sectors, the productivity of firms in mechanized cotton spinning was initially highly dispersed. Over the subsequent decades, cotton spinning experienced dramatic productivity growth that was almost entirely driven by a disappearance of firms in the lower tail, while innovations in the comparison sectors shifted the whole productivity distribution. Rich historical evidence suggests that these patterns were driven by the need to re-organize production under the new technology. This process of 'trial and error' led to widely dispersed initial productivity 'draws,' low initial average productivity, and -- in the subsequent decades -- to high productivity growth as new entrants adopted improved methods of production and organization. We document evidence consistent with this mechanism through the spatial diffusion of best practice knowledge.
Keywords: Industrialization, Technology Adoption, Firm Productivity
JEL Classification: F63, O14
Suggested Citation: Suggested Citation