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

Abstract

How does new technology impact labor market outcomes? We address this question by examining the adoption of electricity in Sweden during the early 20th century. Leveraging detailed individual-level data that covers the entire labor market and exogenous variation in electricity access driven by proximity to hydro-power plants, we estimate the impact of electrification on individual labor market outcomes. Our findings show significantly higher earnings in electricity-adopting parishes compared to control areas. The income gains were particularly pronounced among lower-income workers and those with primary education only, resulting in reduced income inequality. These effects held across labor markets with both strong and weak union presence, suggesting that electricity functioned as a labor-supporting technology. Our results highlight how specific technologies can shape individual outcomes and income distributions.