Consequences of Technological Change

Session organizer/s: Suvi Heikkuri

At the roots of the industrial take-off: evidence from the Swedish parishes (1750-1850)

Session: 1

Authors: Anna Missiaia

Co-authors: Fredrik Sandgren

Abstract: The emergence, disappearance and relocation of jobs are inherent features of modern economic growth and a result of technological change and evolving market conditions. These dynamics, observed both in today’s globalized world and in past waves of globalization, have an important regional dimension, with some regions striving and some declining. The historical literature has been increasingly interested in relating the pre-industrial regional specialization with the subsequent location of industrial activity during the take-off of modern economic growth. In particular, the British case studied within the Cambridge Population Group has shown a high level of specialization well before the beginning if the First Industrial Revolution (Keibek, 2017a, 2017b, 2017c). These results have revived the interest in the study of the proto industrial activities, which have been approached in the past using case-studies (Isaacsson & Magnusson, 1987). We embrace the quantitative approach proposed by the Cambridge Population Group and look at the case of Sweden, a late industrializer that developed into one of the most dynamic economies of the continent and relate the regional patterns before the industrial take-off to the subsequent location of industrial activity later on. We rely on a novel database on the occupational structure of the Swedish parishes from 1750 to 1850 based on data from Tabellverket. Using GIS, we create time-invariant parish boundaries that allow to track employment change over time using consistent geographical units. We then test whether the employment structure of parishes during the industrial take-off responded the pre-industrial occupational specialization.

Development of Artisan Workshops in Southern Sweden, 1840-1890.

Session: 1

Authors: Johanne Arnfred

Co-authors: NA

Abstract: In this paper, I will analyse how the number and composition of artisan workshops in four Swedish towns changed in the latter half of the 19th century. During this period, Sweden went through drastic changes on institutional, social and economic levels. I will investigate how two of these changes – early industrialisation and increased freedom of trade – affected the artisan trades. Industrialisation has received much attention in research, but often with a focus on inventions and factories. Less attention has been given to how this development affected the artisan trades. Overlapping with early industrialisation, new legislation promoting freedom of trade for artisans were introduced in Sweden through the Factory and Handicraft Regulation (1846) and the Decree of Extended Freedom of Trade (1864). These new laws reduced entry barriers, abolished the guilds and made it possible for a wider proportion of society, including women, to open artisan workshops – at least in theory. The study is focused on artisans in the towns Helsingborg, Karlskrona, Landskrona, and Lund in Southern Sweden.

Previous research looking at the development of artisan trades has mostly worked on an aggregate level or focused on a specific trade, but this study will be based on a database containing individual artisans of all trades. The database has been created by digitising a set of craft censuses, consisting of annual workshop-level data including information about the name of owner and number of employees. This individual level data will provide a detailed level of understanding, as we can follow how both workshops and trades fared through the years. To look at the effect of industrialisation, we can compare these numbers with the development of competing factories in the area to analyse which trades might be affected the most by industrialisation. The database is also used to look at how the legal changes affected the number of workshops. Here it is special interest to see if we can find a change in how long companies stay in business before and after the changes and if this varies by type of trade, since this can give us a hint about barriers of entrance. It is also of interest to see if the gender distribution of the proprietors changed with the new legislation.

Holy Cows and Spilt Milk: A Firm Level Analysis of the Impact of Religious Conflict on Productivity

Session: 1

Authors: Christian Vedel

Co-authors: Jeanet Bentzen, University of Copenhagen, Nina Boberg-Fazlic, TU Dortmund University, Paul Sharp, University of Southern Denmark, Christian Skovsgaard, University of Southern Denmark

Abstract: This study examines the impact of non-violent religious conflict on productivity during the industrial revolution in Denmark. Focusing on a Protestant and otherwise homogeneous country, we construct a rich microlevel dataset of 619 butter factories (creameries), the main catalyst of the industrial revolution in Denmark. The Inner Mission - a neo-piestist movement, caused conflict by advocating for the closure of creameries on Sundays in accordance with the Third Commandment. We find that this conflict led to lower productivity in creameries. Using two Bartik-style instruments - the presence of Carl Moe and the spread of Inner Mission in 1890, both before the period studied - we find that the effect is best explained by the creameries’ conflict about religious questions rather than the closure of creameries on Sundays by itself. Our results suggest that non-violent religious conflict can have a negative impact on productivity, which in turn might have long-term consequences for development.

A new perspective on innovation and industrialization

Session: 2

Authors: Kristine Bruland

Co-authors: NA

Abstract: Industrialization created a new world which was technology, resource and energy intensive and continuously innovative. The industrial transition led to continuous economic growth, and to the ecological crises we are now experiencing. However, there is still confusion about what this revolutionary process in fact was, and how it happened. This transition has traditionally been understood as an Industrial Revolution - a British event which took place approximately between 1760 and 1830, driven by mechanized textile factories and steam power, and later emulated elsewhere. I argue against this view and present an alternative. I argue that growth started much earlier (from around 1400); that innovation took place across the economy (and accelerating from around 1700), and that it was a part of a global restructuring. If technological change took place across the whole economy we need a wide, society-encompassing explanation. I argue that we must bring capitalism back into the history of industrialization. I focus on three drivers which both fostered and forced innovation, namely firm-level technological competition in products, capitalists’ control of the work process within the business, and the development of competitive firms within a specialized machine making industry. Such a perspective means that the industrial transition becomes extended in time and broadened in geographical reach. It was a European process, which again was linked to global changes, which included the growth of the Atlantic system, imports of Asian goods to Europe, and global competition in the west-African slave market, from around 1600.

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

Session: 2

Authors: Suvi Heikkuri

Co-authors: Svante Prado,

Abstract: 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.

The impact of electricity on productivity: an industry-level approach to Swedish manufacturing, 1913–1938

Session: 2

Authors: Svante Prado

Co-authors: Christopher Absell and Jesper Hamark

Abstract: Technological change takes place spasmodically, as research demonstrates; a commonly shared view among economic historians is that a few sets of specific technologies, coined GPTs, have had the most far-reaching impact on economic development (Bresnahan & Trajtenberg 1995). Most authors agree that electricity deserves the epithet of a GPT. The introduction of electricity, and in particular the use of small electric motors, did away with the shafts, pulleys and belts that criss-crossed the factory hall. Instead of being propelled by a single source of motive power through line shafts and countershafts, each machine was run by a small electric motor. The growing use of unit drive facilitated a complete reconfiguration of the factory. The operation of the factory now required less manual workers. Besides reducing the demand for manual labour, unit drive entailed several indirect savings, such as increased flow of production, improved working environments, improved machine control and ease of plant expansion.

The transition from steam to electricity was rapid in the US, in particular during WWII. Much of the remarkably rapid growth of total factor productivity in manufacturing during the 1920s probably stemmed from the benefits that could be reaped from electrification (Field 2006). Because electrification occurred across the board of industries, we could perhaps expect that productivity advances across industries be similar. A way to test this notion is to deploy the Harberger’s distinction between yeast and mushroom-like patterns of productivity growth rates: he labelled an even pattern yeast-like and an uneven pattern mushroom-like. David and Wright (2003) argue that productivity growth rates became yeast-like in the 1920s and 1930s as the advantages of electricity came to fruition.

In Sweden, though, electrification proceeded even faster. Prado (2014) argues that the uniform productivity pattern that manifested itself in the first decade of the twentieth century owed to electrification. Before the turn of the century, productivity advances were largely mushroom-like because steam never had the potential to foster productivity growth rates across large swathes of the manufacturing sector. Prado’s investigation ends in 1912, however, coinciding with the end of the old version of the industrial statistics. To confirm the truth of his conjecture – that electricity was responsible for the unified productivity growth patterns in the first decade of the twentieth century – would require us to examine the interwar years, when electrification accelerated, first, and then came to an end when all manufacturing processes were run by electric motors in the end of the 1930s.

Therefore, in this paper we will attempt to continue the search for productivity advances and electrification in the interwar years. We do so by drawing on a sample of sixty industries in 1913–1950, combining the volume output series of Johansson (1985) and various issues of Board of Trade, and employment and other variables from the Swedish Industrial Statistics. We use the Harberger metaphor of yeast versus mushroom to identify whether electricity had the qualities of a true GPT. We then apply panel data econometrics to establish the impact of electricity on productivity advances.