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Induced automation: evidence from firm-level patent data


Dechezleprêtre, Antoine; Hémous, David; Olsen, Morten; Zanella, Carlo (2021). Induced automation: evidence from firm-level patent data. Working paper series / Department of Economics 384, 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.

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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:O31, O33, J20
Uncontrolled Keywords:Automation, innovation, patents, income inequality
Language:English
Date:April 2021
Deposited On:27 Apr 2021 10:32
Last Modified:27 Apr 2021 13:27
Series Name:Working paper series / Department of Economics
Number of Pages:78
ISSN:1664-705X
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1066

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