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Sources of Innovation, Creativity, and Productivity

Paper Session

Saturday, Jan. 7, 2017 1:00 PM – 3:00 PM

Hyatt Regency Chicago, Horner
Hosted By: Cliometric Society
  • Chair: Joel Mokyr, Northwestern University

The Ties That Bind: Railroad Gauge Standards, Collusion, and Internal Trade in the 19th Century United States

Daniel P. Gross
,
Harvard University

Abstract

Technology standards are pervasive in the modern economy, and a target for public and private investments, yet evidence on their economic importance is scarce. I study the conversion of 13,000 miles of railroad track in the U.S. South to standard gauge between May 31 and June 1, 1886 as a large-scale natural experiment in technology standards adoption that instantly integrated the South into the national transportation network. Using route-level freight traffic data, I find a large redistribution of traffic from steamships to railroads serving the same route that declines with route distance, with no change in prices and no evidence of effects on aggregate shipments, likely due to collusion by Southern carriers. Counterfactuals using estimates from a joint model of supply and demand for North-South freight transport suggest that if the cartel were broken, railroads would have passed through 50 percent of their cost savings from standardization, generating a 10 percent increase in trade on the sampled routes. The results demonstrate the economic value of technology standards and the potential benefits of compatibility in recent international treaties to establish transcontinental railway networks, while highlighting the mediating influence of product market competition on the public gains to standardization.

The Role of Production Factor Quality and Technology Diffusion in 20th Century Productivity Growth

Gilbert Cette
,
Bank of France and Aix-Marseille University
Remy Lecat
,
Bank of France
Antonin Bergeaud
,
London School of Economics and Political Science

Abstract

The role of production factor quality and technology diffusion in 20th century productivity growth

Copyright and Creativity: Evidence from Italian Operas

Michela Giorcelli
,
University of California-Los Angeles
Petra Moser
,
New York University and NBER

Abstract

This paper exploits variation in the adoption of copyright laws – due to idiosyncratic variation in the timing of Napoléon’s military victories – to investigate the causal effects of copyright laws on creativity. To measure variation creative output, we use new data on 2,598 operas that premiered across eight states within Italy between 1770 and 1900. This analysis indicates that the adoption of basic levels of copyright laws raised both the level and the quality of creative output in states with copyrights. The benefits of additional years of copyright, however, decline with the existing length of copyrights. Composer-level analyses indicate that much of the observed increase in creativity was driven by immigrants, who were attracted to states with favorable copyright terms. Consistent with agglomeration externalities, we also find that cities with a better pre-existing infrastructure of performance spaces benefitted more copyright laws.

The Impact of Institutions on Innovation

Alexander Donges
,
University of Mannheim
Jean-Marie A. Meier
,
London Business School
Rui C. Silva
,
London Business School

Abstract

This paper studies the impact of institutional reforms on innovation. We use the timing and geography of the French occupation of different regions of Germany after the French Revolution of 1789 as an exogenous shock to the institutions of those regions. Combining novel county-level data on Imperial Germany with data on patents per capita, we show that counties whose institutions are more inclusive as a result of the French occupation become more innovative. The institutional reforms that are associated with comparing a county with no occupation to a county with the longest occupation, result in a 129% increase in the number of patents per capita. This result is robust to alternative explanations, such as reverse causality, human capital and financial development. Our findings point to institutions as a first order determinant of innovation and highlight the role of innovation as a key mechanism through which institutions may lead to economic growth.
Discussant(s)
Douglas Puffert
,
Gordon College
Nicolas Ziebarth
,
University of Iowa
Francois Velde
,
Federal Reserve Bank of Chicago
Kristen Wandschneider
,
Occidental College
JEL Classifications
  • N4 - Government, War, Law, International Relations, and Regulation