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IFS-STICERD Public Economics Seminar

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

Xavier Jaravel (LSE), joint with Philippe Aghion, Celine Antonin, Simon Brunel

Wednesday 10 March 2021 16:30 - 17:30

This event will take place online.

Many of our seminars and public events this year will continue as online seminars or as online and in person. Please check our website listings and Twitter feed @STICERD_LSE for updates.


About this event

We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, sales, prices, and the labor share. 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 sales and lower consumer prices. The estimated elasticity of employment to automation is +0.31, compared with elasticities of +0.40 for sales, and -0.28 for prices. We cannot reject that the share of labor in total value added remains unchanged. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation appears to be stronger 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.

This seminar series is jointly organized by the IFS and STICERD.

IFS-STICERD Public Economics seminars are held on Wednesdays in term time at 16:30-17:30 ONLINE or at 12.30-12.45 IN PERSON at the IFS.

Seminar organisers: Stuart Adam (IFS), Monica Costa Dias (IFS), Xavier Jaravel (LSE), Camille Landais (LSE), Attila Lindner (UCL), Joana Naritomi (LSE), and Johannes Spinnewijn (LSE).

For further information please contact Lubala Chibwe, either by email: l.chibwe@lse.ac.uk.

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This event will take place online.