WP Global Economy 2017.07.27
This paper attempts to contribute to the "factory debate" by disentangling the effects of the technological change and the organizational change in the rise of the factory, using a unique dataset from Japan in the early twentieth century. It is found that the productivity of a factory worker was 2.46 times larger than that of an outworker under the putting-out system, after controlling for the effect of the power loom. The impact of the factory system was almost as large as that of the power loom in the case where all the hand looms were replaced by power looms. This finding indicates how substantial the effect of the organizational change was that gathered dispersed workers under the one roof.