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, Defacto (in Hungarian)
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: Evidence from Industrialization in France
with Mara P. Squicciarini and Nico Voigtländer
Revision requested by the Journal of Political Economy
New technologies tend to be adopted slowly and – even after being adopted – take time to be reflected in higher aggregate productivity. One prominent explanation for these patterns is the need to reorganize production, which often goes hand-in-hand with major technological breakthroughs. We study a unique setting that allows us to examine the empirical relevance of this explanation: the adoption of mechanized cotton spinning during the First Industrial Revolution in France. The new technology required reorganizing production by moving workers from their homes to the newly-formed factories. Using a novel hand-collected plant-level dataset from French archival sources, we show that productivity growth in mechanized cotton spinning was driven by the disappearance of plants in the lower tail – in contrast to other sectors that did not need to reorganize when new technologies were introduced. We provide evidence that this was driven by the need to learn about optimal ways of organizing production. This process of `trial and error' led to initially low and widely dispersed productivity, and – in the subsequent decades – to high productivity growth as knowledge diffused through the economy and new entrants adopted improved methods of organizing production.
All aboard: The effects of port development
with César Ducruet, Dávid Krisztián Nagy and Claudia Steinwender
Transport infrastructure facilitates the fast flow of goods and people across space, but it also occupies extensive amounts of land. This may drive up land rents and crowd out other economic activity. Using the introduction of containerized shipping – a relatively land-intensive technology –, we find an important role for this crowding-out effect. At the local level, we find that seaport development increases city population by making a city more attractive, but this well-known market access effect is offset by the crowding-out mechanism. At the aggregate level, while we estimate overall welfare gains from containerization, our quantitative model featuring endogenous port development also implies i) sizeable welfare costs associated with the increased land-usage of ports, and ii) sizeable gains from cities' endogenous specialization across port- and non-port activities. These mechanisms are particularly important for targeted port development policies, which we illustrate by evaluating the effects of the Maritime Silk Road.
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.
Away from Home and Back: Coordinating (Remote) Workers in 1800 and 2020
with Mara P. Squicciarini and Nico Voigtländer
We examine the future of remote work by drawing parallels between two contexts: The move from home to factory-based production during the Industrial Revolution and the shift to work from home today. In both cases, new technology induced new working arrangements, and this shift was associated with a similar trade-off in the past as it is today: productivity advantages and cost savings versus organizational barriers such as coordinating workers under the new workplace arrangement. Using contemporary data, we show that the COVID-19 pandemic moved even sectors with high organizational barriers to working from home. Without further technological or organizational innovations, this shift is likely to be reversed, and remote work may not be here to stay just yet.