Power for progress: The impact of electricity on individual labor market outcomes

When does technological change lead to inclusive prosperity? Research suggests that shared benefits from technological progress require concurrent expansions in education and support from pro-labor institutions. We contribute to the debate by studying electricity adoption in Sweden during the first decades of the 20th century. Exploiting that proximity to hydro-power plants shaped the electricity network independently of previous local conditions, we estimate the impact of electricity on individual labor market outcomes. We find that individuals in electricity-adopting parishes were more likely to hold electricity-related jobs, and earned on average higher incomes than comparable individuals. In terms of the distributional impact on the local labor market, the income increase was more pronounced at the lower end of the economic spectrum and for those with just primary education, contributing to reduced inequality. These positive effects were observed in places with strong and weak unions alike, suggesting that electricity was an innately labor-supporting technology. To understand the impact of technology on labor markets, more attention should be paid to the feature of the technologies themselves.