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What Are the Labor and Product Market Effects of Automation? New Evidence from France

Philippe Aghion, Céline Antonin, Simon Bunel and Xavier Jaravel ()
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Philippe Aghion: Collège de France and London School of Economics

No 2020-01, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis — plant, firm, and industry — the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.

Keywords: Automation; employment; plant-level; firm-level; labor market; product market; manufacturing; France. (search for similar items in EconPapers)
JEL-codes: J23 J24 L11 O3 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-bec, nep-eur, nep-lma and nep-tid
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Related works:
Working Paper: What Are the Labor and Product Market Effects of Automation? New Evidence from France (2020) Downloads
Working Paper: What Are the Labor and Product Market Effects of Automation?: New Evidence from France (2020) Downloads
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