DP15144 Engineering Growth

Author(s): William F Maloney, Felipe Valencia Caicedo
Publication Date: August 2020
Keyword(s): Development, Engineers, growth, History, Human Capital, Innovation, patents, structural transformation, technology diffusion
JEL(s): I23, N10, O11, O30
Programme Areas: Development Economics, Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15144

This paper offers the first systematic historical evidence on the role of a central actor in modern growth theory-the engineer. It collects cross-country and state level data on the labor share of engineers for the Americas, and county level data on engineering and patenting for the U.S. during the Second Industrial Revolution. These are robustly correlated with income today after controlling for literacy, other types of higher order human capital (e.g. lawyers, physicians) and demand side factors, as well as after instrumenting engineering using the 1862 Land Grant Colleges program. A one standard deviation increase in engineers in 1880 accounts for 10% higher US county incomes today, while patenting capacity contributes another 10%. To document the mechanisms through which engineering density works, we show how it supported technology adoption and structural transformation across intermediate time periods, and is strongly correlated with numerous measures of the knowledge economy today.