Morning Must-Read: Jeanne Lafortune, José Tessada, and Ethan Lewis: The Evolving Relationship Between Capital and Skill In Manufacturing

Owen Zidar sends us to Jeanne Lafortune, José Tessada, and Ethan Lewis: People and Machines: A Look at The Evolving Relationship Between Capital and Skill In Manufacturing 1850-1940 Using Immigration Shocks: “[Did the] Second Industrial Revolution change the way…

…inputs were used in the manufacturing sector[?]… We estimate the impact of immigration-induced changes in skill mix in local areas in the United States between 1860 and 1940 on input ratios within manufacturing…. Production functions were strongly altered over the period under study: capital began our period as a q-substitute for high skill workers and a strong complement of low-skill workers. This changed around the turn of the twentieth century when capital became a complement of skilled workers and decreased its complementary with low-skilled workers…. Within-industry changes in production technique were the dominant manner in which areas adapted to immigration driven skill shocks…. We nevertheless fail to find significant impact of changes in skill mix on wages…