%0 Report
        %A Lafortune, Jeanne
%A Tessada, José
%A Lewis, Ethan Gatewood
        %T People and Machines: A Look at the Evolving Relationship Between Capital and Skill in Manufacturing 1860-1930 Using Immigration Shocks
        %D 2015
        %8 2015 Jul
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 9217
        %U https://www.iza.org/publications/dp9217
        %X This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill-mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.
        %K manufacturing
%K skill-biased technical change
%K capital-skill complementarity
%K immigration
%K Second Industrial Revolution