Technology Adoption and Productivity Growth: Evidence from Industrialization in France

Abstract

New technologies tend to be adopted slowly and – even after being adopted – take time to be re- flected 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 organizational chal- lenges such as developing optimal plant layout. A 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 orga- nizing production.