American Economic Review, 108 (11): 3339-76
Awarded FREIT-EIIT Best Graduate Paper Prize, 2014
Media coverage: Trade Talks, AEA Research Highlights, Vox, CentrePiece, chrisblattman.com, Bloomberg, pseudoerasmus.com
This paper uses a natural experiment to estimate the causal effect of temporary trade protection on long-term economic development. I find that regions in the French Empire which became better protected from trade with the British for exogenous reasons during the Napoleonic Wars (1803-15) increased capacity in mechanized cotton spinning to a larger extent than regions which remained more exposed to trade. In the long-run, regions with exogenously higher spinning capacity had higher activity in mechanized cotton spinning. They also had higher value-added per capita in industry up to the second half of the 19th century, but not later.
Technology Adoption and Productivity Growth During the Industrial Revolution: Evidence from France
with Mara P. Squicciarini and Nico Voigtländer
We construct a novel 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 exploit a key feature of the setting that allows us to isolate the productivity distribution of the adopters of new technology: Before mechanization, cotton spinning was performed in households, while production in firms only emerged with the new technology around 1800. We contrast the evolution of the productivity distribution for mechanized cotton spinners to two comparison sectors — metallurgy and paper milling. We document several stylized facts that can explain the well-documented puzzle that major technological breakthroughs tend to be adopted slowly across firms and — even after being adopted — take time to be reflected in higher aggregate productivity: Relative to the comparison sectors, the productivity of firms in mechanized cotton spinning was initially highly dispersed. Over the subsequent decades, cotton spinning experienced dramatic productivity growth that was almost entirely driven by a disappearance of firms in the lower tail, while innovations in the comparison sectors shifted the whole productivity distribution. Rich historical evidence suggests that these patterns were 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 production and organization. We document evidence consistent with this mechanism through the spatial diffusion of best practice knowledge.
All aboard: The aggregate effects of port development
with César Ducruet, Dávid Krisztián Nagy and Claudia Steinwender
This paper studies the distributional and aggregate economic effects of new port technologies developed in the second half of the 20th century. We show that new technologies have led to a significant reallocation of shipping activity from large to small cities. This was driven by a land price mechanism; as new port technologies are more land-intensive, ports moved from large, high land price cities to smaller, lower land price ones. We add endogenous port development to a standard quantitative model of cross-city trade to account for both the benefits and the costs of port development. According to the model, the adoption of new port technologies leads to benefits through increasing market access but is costly, requiring the extensive use of land, suggesting a reallocation of shipping activities towards cities with low land prices and thus net gains from new port technologies that are heterogeneous across cities. Counterfactual results suggest that new port technologies led to sizable aggregate gains for the world economy, with substantial heterogeneity in the effects across countries. More generally, accounting for the costs of port infrastructure development endogenously has the potential to alter the size and distribution of the gains from trade.
previously circulated as "Drivers of Fragmented Production Chains: Evidence from the 19th century"
This paper uncovers a novel mechanism through which information frictions matter for trade in differentiated goods; the product specification mechanism. We estimate the effect of a reduction in communication time on imports of three product categories in 19th century cotton textile trade; yarn, plain cloth, and finished cloth. In order to identify causal effects, we use exogenous variation in the ruggedness of the submarine seafloor to predict in which year countries get connected to the global telegraph network. The telegraph dramatically reduced the time it took to exchange information expressed in words, but did not affect the exchange of physical objects such as product samples. Using evidence from cotton traders' communication, we show that the examined three products differed in their codifiability, that is, in the extent to which merchants specified product attributes in words. Empirically, we find that communication time reductions had the largest effect on imports of the most codifiable product; yarn, and the smallest effect on the non-codifiable product, finished cotton cloth. Our results suggest that the effect of ICT on trade and fragmentation of production depends on the technology-specific codifiability of product specifications.