How much of the rapid growth in labor productivity in nineteenth century cotton weaving arose from capital-labor substitution and how much from technical change? Using an engineering production function and detailed information on inventions, I find that factor substitution accounts for little growth. However, much of the growth and most of the apparent labor-saving bias arose not from inventions, but from improved labor quality — better workers spent less time monitoring the looms. The inventions themselves were almost technically neutral because innovations in general purpose technologies were capital-saving. Labor quality played a critical role in the persistent association between economic growth and capital deepening in this important sector.
More Machines, Better Machines...Or Better Workers?
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