Productivity Growth in Manufacturing During Early Industrialization: Evidence from the American Northeast, 1820 to 1860

This paper reports estimates of labor and total factor productivity, for thirteen manufacturing industries in the Northeast over the period from 1820 to 1860. It finds that although the highly mechanized and capital-intensive industries, such as cotton and wool textiles, realized somewhat more rapid progress than the others did, even the latter managed major advances. The evidence appears to support the conclusion that the manufacturing sector in the Northeast was quite dynamic during this stage of industrialization, and that much of its early productivity growth can be explained by changes in production processes that did not require mechanization or substantial increases in capital intensity. This suggests, as has been argued by a number of recent studies building on an old tradition, that developments such as increases in the division and intensity of labor within firms and other relatively subtle alterations in technique, perhaps stimulated by the expansion of markets, may have played important roles in accounting for the progress achieved.