Induced automation: evidence from firm-level patent data

Antoine Dechezleprêtre, David Hemous, Morten Olsen and Carlo Zanella

No 384, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Do higher wages lead to more automation innovation? To answer this question, we first use the frequency of certain keywords in patent text to create a new measure of automation innovation in machinery. We show that our measure is correlated with a reduction in routine tasks in a cross-sectoral analysis in the US. We combine macroeconomic data from 41 countries and information on geographical patent history to build firm-specific measures of low- and high-skill wages. In a firm-level panel analysis, we find that an increase in low-skill wages leads to more automation innovation with an elasticity between 2 and 5. Placebo regressions show that the effect is specific to automation innovations. Finally, we focus on a specific labor market shock, the German Hartz reforms, and show that they reduced automation innovations by those non-German firms relatively more exposed to Germany.

Keywords: Automation; innovation; patents; income inequality (search for similar items in EconPapers)
JEL-codes: J20 O31 O33 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-bec, nep-ino, nep-ipr, nep-lma and nep-tid
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:384

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