The origins of technology-skill complementarity

Current concern with the impact of new technologies on the wage structure motivates this study. We offer evidence that technology-skill and capital-skill (relative) complementarities existed in manufacturing early in this century and were related to the adoption of electric motors and particular production methods. Industries, from 1909 to 1929, with more capital per worker and a greater proportion of motive energy coming from purchased electricity employed relatively more educated blue-collar workers in 1940 and paid their production workers substantially more. We also find a strong positive association between changes in capital intensity and the nonproduction worker wage bill from 1909–1919 imply-ing capital-skill complementarity as large as in recent years. The recent coincidence of computerization and a widening wage structure has led many to conclude that new technologies and human capital are relative complements and that large injections of education may be necessary to reduce the impact of advancing technology on inequality.1 In a related literature, physical capital and skill have been shown to be relative comple-ments both today and in the recent past.2 These findings, take