Description:

Ethan Lewis (Dartmouth): Electricity and Directed Technological Change: Evidence from US Rural Electrification.

Abstract: This paper examines the impact of rural electrification on the direction of agricultural innovations between 1910 and 1950. We combine variation across counties in proximity to power plants and variation across agricultural products in pre-electrification energy intensity. We find that local access to electric power induced an increase in electricity-related patents differentially in energy-intensive products.  These patents were widely cited in following decades, were in activities in which electricity was anticipated to be useful, and were mostly the work of new inventors. The impacts were also larger in counties where agriculture labor was scarcer.  Our findings support theories of endogenous technological change in which invention responds to local incentives.