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Automation, Work and Productivity: The Role of Firm Heterogeneity

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We construct an oligopolistic model with heterogeneous firms where new automation technologies displace workers. We show that both leading and laggard firms increase their productivity when automating—but only laggards increase employment of automation-susceptible workers. We test the model’s predictions using Swedish matched employer—employee data combined with a novel firm-level automation measure of worker exposure to new technologies. Our empirical results strongly support a relationship between workforce exposure to automation and productivity that varies by firm type. Consequently, a diversity of firm types may function as insurance against excessive labor demand reductions in periods of fast technological change.

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  • Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2021. "Automation, Work and Productivity: The Role of Firm Heterogeneity," Working Paper Series 1382, Research Institute of Industrial Economics, revised 09 Mar 2023.
    • Handle: RePEc:hhs:iuiwop:1382
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    More about this item

    Keywords

    Automation; Robotics; Job displacement; Firm Heterogeneity; Productivity; Matched employer-employee data;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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