American Political Science Review Vol.96,No.3 the findings of Grossman and Levinsohn(1989),based since that time (Mincer 1984).Job tenure rose along upon a study of stock-market returns in the 1970s and with training in firm-specific skills(Carter and Savocca 1980s,and conclusions reached by Ramey and Shapiro 1990:Sundstrom 1988).Meanwhile.barriers to exit and (1998),based upon prices in secondary markets for cap- entry for manufacturing firms appear to have risen ital equipment.19 markedly along with the growing importance of spe- cialized technologies(Ramey and Shapiro 1998)and Industrialization and Factor Mobility as a function of the higher start-up costs and increased investments in physical capital associated with the gen- The evidence indicates that there have been substan- eral growth in the scale of production (Caves and Porter tial changes over time in general levels of interindustry 1979).21 labor and capital mobility in the U.S.economy.The pat- tern that emerges-rising mobility during most of the COALITION PATTERNS IN U.S.TRADE nineteenth century,falling mobility in recent decades- POLITICS:CONGRESSIONAL VOTES, can be explained by the technological transformations 1824-1994 associated with industrialization.Historical accounts of American economic development have emphasized a Expectations and Evidence range of technological changes that combined to make the economy more fluid during the early stages of in- In light of the evidence that levels of interindustry fac- dustrialization in the nineteenth century (e.g.,Sokoloff tor mobility have varied substantially in the american and Villaflor 1992).Major innovations in systems of economy over time,the question remains as to whether water,rail,and road transportation drastically lowered these changes have produced the expected changes the costs of factor movement and lessened the impor- political coalitions.If the argument advanced above tance of geography to economy(Davis,Hughes,and is correct,the formation of broad factor-owning class McDougall 1961,276-96).Labor migration and cap- coalitions should have been most likely during peri- ital flows grew markedly (Perloff 1965).Agricultural ods when interindustry factor mobility was relatively producers were affected too,as distance from markets high (between the 1880s and the 1920s),while narrow and resources became less important for the location industry-based coalitions should have been most likely of production.At the same time innovations in man- in periods when interindustry mobility was relatively ufacturing technology had profound implications for low(earlier in the nineteenth and later in the twentieth interindustry mobility.New mills and factories replaced centuries).22 craft shops and home manufacture,and the old skills These expectations do fit with some of the stylized of the artisan class were rendered obsolete (Sokoloff historical facts of American trade politics.According to and Villaflor 1992).Much of the new factory technol- standard accounts,trade politics was a predominantly ogy was readily adaptable to use in alternative indus- local,group-based affair at the beginning of the nine- tries (Landes 1969,293-94)and created a vast demand teenth century.The emerging political parties were split for unskilled labor,making it far easier for industrial over the tariff issue along regional lines and trade leg- workers to shift between jobs in different industries islation reflected the competing pressures placed on (Sokoloff 1986).20 Congress by a vast array of locally organized groups Around the turn of the century,however,techno- (Pincus 1977;Stanwood 1903,240-43;Taussig 1931, logical changes in manufacturing began to reverse 25-36).In the years following the Civil War,how- these trends.Most important was the growing comple- ever,trade became the partisan issue in American pol- mentarity between labor skills and the newest tech- itics,as Republicans,drawing broad support mostly nology (Bartel and Lichtenberg 1987;Griliches 1969; from business and labor,supported high protection- Hamermesh 1993).The key change appears to have ist tariffs over the vehement opposition of Democrats taken place in the 1910s and 1920s with the move from and their largely rural constituency (Stewart 1991, assembly-line to continuous-process technology-the 218;Taussig 1931,chaps.5-8;Verdier 1994,108-15). latter requiring more skilled workers in the manage- ment and operation of highly-complex tasks(Cain and Paterson 1986:Goldin and Katz 1996).Growth in the 2 While the evidence that scale economies alone act as powerful demand for specialized human capital has been con- barriers to entry in practice is not strong(Scherer 1980),there is more evidence that larger capital requirements mean that fewer individuals comitant with continued technological improvements or groups can secure the funding needed for entry (Geroski and Jacquemin 1985).Strategic considerations also tend to inhibit exit 1 Note too that increasing capital specificity in recent decades is when scale economies are large (Ghemawat and Nalebuff 1990). evidenced by growing rates of investment in research and develop- 22 For simplicity,levels of mobility are treated as general to all fac- ment by firms-a popular indicator of specificity since it captures tors here.One might prefer to differentiate measures of mobility for the emphasis placed by firms on developing their own technologies each factor,but the evidence indicates that technological forces have (Acs and Isberg 1991).Spending by U.S.manufacturing companies affected levels of mobility in a very similar fashion for all factors. on R&D rose from about 0.5%of sales in 1950 to over 3%in 1990 From Figures 1 and 2 it does seem that levels of interindustry capital (see U.S.Department of Commerce,Statistical Abstract of the United mobility may have peaked earlier than levels of labor mobility,and States,various years). one might thus anticipate that industry-based schisms among owners 20 Goldin(1990.115)has argued that,by the turn of the century,the of capital would predate similar divisions among workers late in the market for labor in the manufacturing sector was essentially a spot nineteenth century.For an extended formal treatment of the con- market,with most jobs easily handled by the average worker.See sequences of allowing different rates of change in capital and labor also Gordon,Edwards,and Reich (1982,112-28). mobility,see Hiscox 1997 597American Political Science Review the findings of Grossman and Levinsohn (1989), based upon a study of stock-market returns in the 1970s and 1980s, and conclusions reached by Ramey and Shapiro (1998), based upon prices in secondary markets for cap￾ital equipment.19 Industrialization and Factor Mobility The evidence indicates that there have been substan￾tial changes over time in general levels of interindustry labor and capital mobility in the U.S. economy. The pat￾tern that emerges-rising mobility during most of the nineteenth century, falling mobility in recent decades￾can be explained by the technological transformations associated with industrialization. Historical accounts of American economic development have emphasized a range of technological changes that combined to make the economy more fluid during the early stages of in￾dustrialization in the nineteenth century (e.g., Sokoloff and Villaflor 1992). Major innovations in systems of water, rail, and road transportation drastically lowered the costs of factor movement and lessened the impor￾tance of geography to economy (Davis, Hughes, -and McDougall 1961, 27&96). Labor migration and cap￾ital flows grew markedly (Perloff 1965). Agricultural producers were affected too, as distance from markets and resources became less im~ortant for the location of production. At the same time innovations in man￾ufacturing technology had profound implications for interindustry mobility. New mills and factories replaced craft shops and home manufacture, and the old skills of the artisan class were rendered obsolete (Sokoloff and Villaflor 1992). Much of the new factory technol￾ogy was readily adaptable to use in alternative indus￾tries (Landes 1969,293-94) and created a vast demand for unskilled labor, making it far easier for industrial workers to shift between jobs in different industries (Sokoloff 1986).~(' Around the turn of the century, however, techno￾logical changes in manufacturing began to reverse these trends. Most important was the growing comple￾mentarity between labor skills and the newest tech￾nology (Bartel and Lichtenberg 1987; Griliches 1969; Hamermesh 1993). The key change appears to have taken place in the 1910s and 1920s with the move from assembly-line to continuous-process technology-the latter requiring more skilled workers in the manage￾ment and operation of highly-complex tasks (Cain and Paterson 1986; Goldin and Katz 1996). Growth in the demand for specialized human capital has been con￾comitant with continued technological improvements lY ~otetoo that increasing capital specificity in recent decades is evidenced by growing rates of investment in research and develop￾ment by firms-a popular indicator of specificity since it captures the emphasis placed by firms on developing their own technologies (Acs and Isberg 1991). Spending by U.S. manufacturing companies on R&D rose from about 0.5% of sales in 1950 to over 3% in 1990 (see U.S. Department of Commerce, Statistical Abstract of the United States. various years). 20 Goldin (1990,115) has argued that, by the turn of the century, the market for labor in the manufacturing sector was essentially a spot market, with most jobs easily handled by the average worker. See also Gordon, Edwards, and Reich (1982,112-28). Vol. 96, No. 3 since that time (Mincer 1984). Job tenure rose along with training in firm-specific skills (Carter and Savocca 1990; Sundstrom 1988). Meanwhile, barriers to exit and entry for manufacturing firms appear to have risen markedly along with the growing importance of spe￾cialized technologies (Ramey and Shapiro 1998) and as a function of the higher start-up costs and increased investments in physical capital associated with the gen￾eral growth in the scale of production (Caves and Porter 1979).2l COALITION PAlTERNS IN U.S. TRADE POLITICS: CONGRESSIONAL VOTES, 1824-1994 Expectations and Evidence In light of the evidence that levels of interindustry fac￾tor mobility have varied substantially in the American economy over time, the question remains as to whether these changes have produced the expected changes political coalitions. If the argument advanced above is correct, the formation of broad factor-owning class coalitions should have been most likely during peri￾ods when interindustry factor mobility was relatively high (between the 1880s and the 1920s), while narrow industry-based coalitions should have been most likely in periods when interindustry mobility was relatively low (earlier in the nineteenth and later in the twentieth ~enturies).~~ These expectations do fit with some of the stylized historical facts of American trade politics. According to standard accounts, trade politics was a predominantly local, group-based affair at the beginning of the nine￾teenth century. The emerging political parties were split over the tariff issue along regional lines and trade leg￾islation reflected the competing pressures placed on Congress by a vast array of locally organized groups (Pincus 1977; Stanwood 1903, 240-43; Taussig 1931, 25-36). In the years following the Civil War, how￾ever, trade became the partisan issue in American pol￾itics, as Republicans, drawing broad support mostly from business and labor, supported high protection￾ist tariffs over the vehement opposition of Democrats and their largely rural constituency (Stewart 1991, 218; Taussig 1931, chaps. 5-8; Verdier 1994, 108-15). 21 While the evidence that scale economies alone act as powerful barriers to entry in practice is not strong (Scherer 1980), there is more evidence that larger capital requirements mean that fewer individuals or groups can secure the funding needed for entry (Geroski and Jacquemin 1985). Strategic considerations also tend to inhibit exit when scale economies are large (Ghemawat and Nalebuff 1990). 22 For simplicity, levels of mobility are treated as general to all fac￾tors here. One might prefer to differentiate measures of mobility for each factor, but the evidence indicates that technological forces have affected levels of mobility in a very similar fashion for all factors. From Figures 1 and 2 it does seem that levels of interindustry capital mobility may have peaked earlier than levels of labor mobility, and one might thus anticipate that industry-based schisms among owners of capital would predate similar divisions among workers late in the nineteenth century. For an extended formal treatment of the con￾sequences of allowing different rates of change in capital and labor mobility, see Hiscox 1997