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The Dynamics of Automation Adoption: Firm-Level Heterogeneity and Aggregate Employment Effects

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  • Laura Bisio
  • Angelo Cuzzola
  • Marco Grazzi
  • Daniele Moschella

Abstract

We investigate the impact of investment in automation-related goods on adopting and non-adopting firms in the Italian economy during 2011-2019. We integrate datasets on trade activities, firms’, and workers’ characteristics for the population of Italian importing firms and estimate the effects on adopters’ outcomes within a difference-indifferences design exploiting import lumpiness in product categories linked to automation and AI technologies. We find a positive average adoption effect on the adopters’ employment and on the value-added and average wage, whereas sales and productivity increase after an initial drop with a net positive effect five years after adoption. Crucially, the employment effect is heterogeneous across firms: a positive scale effect is predominant among small firms, whereas a negative displacement effect is predominant among medium and large firms. We complete the framework with a 5-digit sector-level analysis showing that adopting automation technologies has an overall negative effect on aggregate employment.

Suggested Citation

  • Laura Bisio & Angelo Cuzzola & Marco Grazzi & Daniele Moschella, 2023. "The Dynamics of Automation Adoption: Firm-Level Heterogeneity and Aggregate Employment Effects," CESifo Working Paper Series 10697, CESifo.
    • Handle: RePEc:ces:ceswps:_10697
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    Cited by:

    1. Bernardo Caldarola & Luca Fontanelli, 2024. "Scaling up to the cloud: Cloud technology use and growth rates in small and large firms," Papers 2409.17035, arXiv.org, revised Mar 2025.
    2. Flavio Calvino & Chiara Criscuolo & Luca Fontanelli & Lionel Nesta & Elena Verdolini, 2024. "The role of human capital for AI adoption: Evidence from French firms," CEP Discussion Papers dp2055, Centre for Economic Performance, LSE.
    3. Bernardo Caldarola & Luca Fontanelli, 2024. "Cloud technologies, firm growth and industry concentration: Evidence from France," LEM Papers Series 2024/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Bisio, Laura & Cuzzola, Angelo & Grazzi, Marco & Moschella, Daniele, 2025. "The dynamics of automation adoption: Firm-level heterogeneity and aggregate employment effects," European Economic Review, Elsevier, vol. 173(C).
    5. Julian Tiedtke, 2025. "Automation, Firm Size and Skill Groups," LEM Papers Series 2025/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    6. Mauro Caselli & Edwin Fourrier-Nicolai & Andrea Fracasso & Sergio Scicchitano, 2024. "Digital Technologies and Firms’ Employment and Training," CESifo Working Paper Series 11056, CESifo.
    7. Tiedtke, Julian, 2024. "Unveiling the Job-Creating and Destroying Effects of Automation through the Lense of Heterogeneity," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302375, Verein für Socialpolitik / German Economic Association.

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • 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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