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Induced Automation Innovation: Evidence from Firm-Level Patent Data

Author

Listed:
  • David Hémous
  • Morten Olsen
  • Carlo Zanella
  • Antoine Dechezleprêtre

Abstract

Do higher wages induce more automation innovation? We identify automation patents in machinery. We show that a higher automation intensity predicts a decline in routine tasks across US sectors. Then, we estimate how innovating firms respond to changes in their downstream firms’ low- and high-skill wages. We compute these wages by combining macroeconomic data on 41 countries with innovating firms’ global market exposure. Higher low-skill wages increase automation innovation (but not other machinery innovation), with an elasticity of 2–5. Finally, we show that the German Hartz labor market reforms reduced automation innovations by foreign firms more exposed to Germany.

Suggested Citation

  • David Hémous & Morten Olsen & Carlo Zanella & Antoine Dechezleprêtre, 2025. "Induced Automation Innovation: Evidence from Firm-Level Patent Data," Journal of Political Economy, University of Chicago Press, vol. 133(6), pages 1975-2028.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/734778
    DOI: 10.1086/734778
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    Cited by:

    1. Chris Muris & Konstantin M. Wacker, 2026. "Estimating Interaction Effects With Panel Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 41(4), pages 360-376, June.
    2. Coelli, Federica & Pelzl, Paul, 2025. "Local Booms and Innovation," Discussion Papers 2025/20, Norwegian School of Economics, Department of Business and Management Science.
    3. Sabrina Genz & Emilie Rademakers, 2026. "Automation and collective agreements," Fiscal Studies, John Wiley & Sons, vol. 47(1), pages 53-68, March.
    4. Gorny, Paul M. & Schäfer, Louis, 2025. "Adaptivity and Revealed Robot Aversion in Human-Robot Collaboration: A Field-in-the-Lab Experiment," MPRA Paper 126663, University Library of Munich, Germany.
    5. Valencia, Christian, 2026. "Visa Regulations, Agricultural Employment, and Productivity," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404392, Agricultural and Applied Economics Association.

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