Does Automation Lower the Labor Share?

Zsofia Barany, Aseem Patel and Christian Siegel

No 21700, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A prominent explanation for declining labor shares is automation. We test this mechanism directly at the firm level, drawing on a central prediction of the task-based model of production: firms that automate more should see larger declines in routine employment and labor share. Using administrative data from France between 1994 and 2019, we find no support for this prediction. Changes in routine employment share are either uncorrelated or even negatively correlated with changes in labor share within firms. Our evidence shows that automation is not driving labor share dynamics in France.

Date: 2026-07
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