Abstract
Meyer, Peter B. (2005) "Turbulence, Inequality, and Cheap
Steel"
Iron and steel production grew dramatically in the U.S. when mass production
technologies for steel were adopted in the 1860s. According to new measures
presented in this study, earnings inequality rose within the iron and steel
industries about 1870, perhaps because technological uncertainty led to
gambles and turbulence. Firms made a variety of technological choices and
began formal research and development. Professional associations and journals
for mechanical engineers and chemists appeared. A national market replaced
local markets for iron and steel. An industrial union replaced craft unions.
As new ore sources and cheap water transportation were introduced, new plants
along the Great Lakes outcompeted existing plants elsewhere. Because new iron
and steel plants in the 1870s were larger than any U.S. plants had ever been,
cost accounting appeared in the industry and grew in importance. Uncertainty
explains the rise in inequality better than a skill bias account, according to
which differences among individuals generate greater differences in wages.
Analogous issues of inequality come up with respect to recent information
technology.
Last Modified Date: July 19, 2008
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