DP14970 Technology Adoption and Productivity Growth: Evidence from Industrialization in France

Author(s): Réka Juhász, Mara Squicciarini, Nico Voigtländer
Publication Date: June 2020
Date Revised: October 2020
Keyword(s): Firm productivity, Industrialization, Technology adoption
JEL(s): F63, O14
Programme Areas: Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14970

We construct a novel plant-level 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 document new stylized facts that can help explain why major technological breakthroughs tend to be adopted slowly and -- even after being adopted -- take time to be reflected in aggregate productivity statistics. Before mechanization, cotton spinning was performed in households, while production in plants only emerged with the new technology around 1800. This allows us to isolate the plant productivity distribution of new technology adopters in mechanized cotton spinning. We find that this distribution was initially highly dispersed. Over the subsequent decades, mechanized spinning experienced dramatic productivity growth that was almost entirely driven by a disappearance of plants in the lower tail. In contrast, innovations in other sectors (with gradual technological progress) shifted the whole productivity distribution. We document rich historical and empirical evidence suggesting that the pattern in cotton spinning was 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 operating the mechanized technology.