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Automation, Labor Share, and Productivity: Plant-Level Evidence from U.S. Manufacturing

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Listed:
  • Emin Dinlersoz
  • Zoltan Wolf

Abstract

This paper provides new evidence on the plant-level relationship between automation, labor and capital usage, and productivity. The evidence, based on the U.S. Census Bureau's Survey of Manufacturing Technology, indicates that more automated establishments have lower production labor share and higher capital share, and a smaller fraction of workers in production who receive higher wages. These establishments also have higher labor productivity and experience larger long-term labor share declines. The relationship between automation and relative factor usage is modelled using a CES production function with endogenous technology choice. This deviation from the standard Cobb-Douglas assumption is necessary if the within-industry differences in the capital-labor ratio are determined by relative input price differences. The CES-based total factor productivity estimates are significantly different from the ones derived under Cobb-Douglas production and positively related to automation. The results, taken together with earlier findings of the productivity literature, suggest that the adoption of automation may be one mechanism associated with the rise of superstar firms.

Suggested Citation

  • Emin Dinlersoz & Zoltan Wolf, 2018. "Automation, Labor Share, and Productivity: Plant-Level Evidence from U.S. Manufacturing," Working Papers 18-39, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:18-39
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    File URL: https://www2.census.gov/ces/wp/2018/CES-WP-18-39.pdf
    File Function: First version, 2018
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    References listed on IDEAS

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    Cited by:

    1. Wiljan van den Berge, 2019. "Automatic Reaction – What Happens to Workers at Firms that Automate?," CPB Discussion Paper 390, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

    advanced manufacturing technology; automation; technology choice; total factor productivity; capital-labor substitution; labor share; CES production function; productivity estimation; robots;

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