Steam power, establishment size, and labor productivity growth in nineteenth century American manufacturing

We use establishment-level data from the 1850-1880 censuses of manufacturing to study the relationships among establishment size, steam power use, and labor productivity. Large establishments, measured here by employment, were much more likely to use steam power than smaller establishments. By 1880, slightly more than half of all manufacturing workers were employed in establishments using steam power, compared with 17 percent in 1850 and we show that, after controlling for various establishment characteristics, steam-powered establishments had higher labor productivity than establishments using other sources of power. Moreover, this productivity differential was increasing in establishment size.