Power for progress: The impact of electricity on individual labor market outcomes

Jakob Molinder - Uppsala University
Kerstin Enflo - Lund University
Jonathan Jayes - Lund University

2024-04-10

Research question


How does getting access to new technology (electricity) impact your returns on the labour market, in terms of:

  • Income,
  • Occupational choice, and
  • Choice on where to locate?

Motivation

Why do we care about the second industrial revolution in Sweden?


Other literature:

In the US Gray (2013) -> manufacturing technological change is unskill-biased - “hollowing out”.

In Sweden, Molinder, Karlsson and Enflo (2021): electrification -> stronger bargaining position for workers – “hollowing in”

In Sweden, Heikkuri and Prado are looking at skill-bias and electrification with establishment and industry level data.

New electrical machinery in agriculture and manufacturing

New technology with rapid adoption in Sweden

Who were the early electrifiers in Sweden?

Who were the early electrifiers in Sweden?

Who were the early electrifiers in Sweden?

Who were the early electrifiers in Sweden?

Are the treated and control groups comparable?

Did early electrifiers have access to more power?

Shocked?

Treated parishes have access to more electricity (KvA), controlling for parish area and population.

What happened to early electrifiers in Sweden?

Regression specification

On a cross section with rich data on 343,000 individuals:

\[\text{Outcome}_i = \beta_0 + \beta_1 \text{`Born in treated parish`}_i + \beta_2 \textbf{Controls}_i + \epsilon_i\]

Where \[\beta_1\] is the coefficient of interest and the controls include:

  • Age and age squared

  • Gender

  • HISCLASS (grouped into 7 categories)

  • Education

Employment effects

If new technology automated away tasks, do we see lower rates of individuals recording an occupation?

Income effects

Do individuals with access to new technology have higher incomes than their control parish born comrades?

Income effects across the distribution

Where in the income distribution do we see the largest effects?

Inequality effects

At the parish level, do we see differences in the income distributions between treated and control earners?

What are the mechanisms that drive these effects?

The importance of education

Do you need to move to find the right job?

Paper in a graph:

Findings

We find that when this new technology was adopted in Sweden:

  • It made individuals richer 💰🔋
  • It lowered inequality 📉🤝
  • It allowed structural change on the labor market 🔧💼
  • It created new kinds of jobs 🤖👩‍🔧
  • It benefited those in the middle of the skill distribution 🎓🔌

Appendix

Importance of Western Line

Back to treated parishes

Location of steam and diesel plants

Back to hydropower


Are the treatment and control group comparable?

Are the treatment and control group comparable?

Are the treatment and control group comparable?

Back to treatment and control groups

Quasi first stage

Back to first stage in levels

Employment effect

Back to employment OLS

Common male occupations

Common female occupations

How do we know who the early electrifiers in Sweden were?


Individual level census data

Geographical variation in electrification

Who were the early electrifiers in Sweden?

Grid 1900

Grid 1911

Grid 1926

Why only the Western Line?

Location of transformers

What about other sources of power like coal and diesel turbines?

Timeline of grid rollout

New kinds of occupations created

How do we classify these occupations?

3 categories of jobs:

Occupational choice

Occupational choice

Choice of location

How does union membership play a role?