Ph.D. Candidate in Economics

I examine the long term effects of a negative shock to the human capital of shoemakers in the 19th century. A new machine called the McKay stitcher made shoemaker specific skills redundant and the same task could be completed with a lower skill worker operating the machine. Prior to the McKay stitcher, shoemakers represented almost 2% of the labor force in 1860. Using a simple model of trade, I motivate a county-industry level measure of exposure to this technology that is driven by the transportation network in 1860. Reduced form estimates show that shoemakers living in places with the greatest initial exposure saw lower wealth 10 years later and a large increase in exiting the industry. Migration was not a source of adjustment for shoemakers. Many shoemakers switched into the lower paying factory jobs and saw larger negative wealth effects. Building on evidence of generational effects of wealth and human capital, children of shoemakers were less likely to be in the labor force in 1900 between the ages of 30 and 50 relative to the children of other craftsmen. Children of shoemakers were much more likely to work in the shoe industry despite the strong evidence of negative displacement effects on their parents. Children of shoemakers in high exposure counties were less likely to own a home in 1900. Using a model of occupation switching, I find that the primary cost of the McKay stitcher was in occupation switching costs, with each switch costing approximately 4 years of shoemaker wages.