Electricity as a skill-biased technology: Evidence from Sweden during early 20th century

Lilla salen Session 2: Consequences of Technological Change organized by Suvi Heikkuri


Suvi Heikkuri, Svante Prado


At the turn of the 20th century, electricity was the new general-purpose technology transforming economies across Europe and North America. Thanks to electricity, industrial production increased and extended to new products and markets. The transition from steam to small electric motors made it possible to redesign factories so as to improve workflows and to slash the costs of real capital. Electricity also paved the way for more sophisticated production methods. Goldin and Katz (1998) argue that the emergence of electricity marked the beginning of the so-called technology-skill complementarity, as the production methods enabled by safer and more stable source of power increased the demand for educated blue-collar workers, such as operators and machine-repairers. Electrification also reduced the need for unskilled workers at the factory floor carrying fuel to the machines and semi-finished goods from one machine to another. Furthermore, the larger production units enabled by electricity also increased the demand for managers and office clerks, which were typical white-collar occupations. The influential argument of Goldin and Katz (1998) about electricity and the technology-skill complementarity has, however, not been explored with establishment-level data. In this paper, we test the Goldin-Katz hypothesis in the context of Sweden at the early 20th century. We draw on two public investigations into manufacturing industry that offers establishment-level data for 1913, 1918 and 1926, which is a time frame that captures the heyday of Swedish electrification. The original returns of the investigations that we have digitized offers a unique opportunity to study the relationship between electricity and skills. We test the hypothesis that increased use of electricity is associated with increased employment of skilled relative to unskilled workers.


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