Technological Change in US Coal Mining: Issues and Evidence

Abstract

This article examines recent developments and issues concerning technological change in US coal mining. First, factors that influence the rate of technological change, such as firm profit, industry structure, and investment are discussed with attention paid to economic conditions in the 1970s. This discussion concludes that characteristics such as geological variability, product homogeneity, and the high-cost long-term nature of investment required in coal mining result in lower levels of R&D in coal mining than in other industries. However, high rates of profit and the growth in coal demand in the 1970s resulted in growth in coal mining R&D throughout much of the 1970s. Second, evidence of technological change in coal mining in examined. Data concerning the employment of scientists and engineers and R&D expenditures are analyzed. More direct measures of technological change such as productivity indexes, are also examined. These data suggest that changes in the types of coal mine work activities (health, safety, and environment as opposed to coal removal) have resulted in reduced coal productivity in the face of increasing R&D. Given the relationship between sales, profit, investment, and R&D and technological change, the most beneficial means of advancing technology in coal mining would be a healthy, sustained rate of growth in the coal market. Even in favorable economic conditions, the coal industry is unlikely to undertake highly innovative R&D because of industry characteristics that are unaffected by economic variables. This gap in innovative R&D is a possible area of public sector involvement.