Jump to ContentJump to Main Navigation
Enterprising AmericaBusinesses, Banks, and Credit Markets in Historical Perspective$
Users without a subscription are not able to see the full content.

William J. Collins and Robert A. Margo

Print publication date: 2015

Print ISBN-13: 9780226261621

Published to Chicago Scholarship Online: May 2016

DOI: 10.7208/chicago/9780226261768.001.0001

Show Summary Details
Page of

PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use (for details see www.chicago.universitypressscholarship.com/page/privacy-policy).date: 17 October 2018

Economies of Scale in Nineteenth-Century American Manufacturing Revisited

Economies of Scale in Nineteenth-Century American Manufacturing Revisited

A Resolution of the Entrepreneurial Labor Input Problem

(p.215) 6 Economies of Scale in Nineteenth-Century American Manufacturing Revisited
Enterprising America

Robert A. Margo

University of Chicago Press

In a classic paper, Kenneth Sokoloff argued that the labor input of entrepreneurs was generally omitted from the count of workers in manufacturing establishments in the early US censuses of manufacturing. This biased downward econometric estimates of economies of scale if left uncorrected. As a fix Sokoloff proposed a “rule of thumb” imputation for the entrepreneurial labor input. Using establishment level manufacturing data from the 1850-80 censuses and textual evidence I argue that, contrary to Sokoloff’s claim, the census did generally include the labor of entrepreneurs if it was economically relevant, so Sokoloff’s imputation is not warranted for these census years. However, like Sokoloff I find that the census understated the labor input in small relative to large establishments, but for a different reason. The census purported to collect data on the average labor input, but it most likely measures the typical number of workers present. For very small establishments the reported typical number of workers is biased downwards relative to a true average but this is not so for large establishments. Therefore, the early censuses of manufacturing overstated labor productivity in small relative to large establishments but the size of the bias is smaller than alleged by Sokoloff.

Keywords:   scale economies, entrepreneurial labor input, artisan shop, factory, division of labor

Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.