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The dynamics of automation adoption: Firm-level heterogeneity and aggregate employment effects

Author

Listed:
  • 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-in-differences 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," LEM Papers Series 2023/37, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2023/37
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    1. repec:hal:spmain:info:hdl:2441/170cd4sul89ddpnfuomvfm0jc0 is not listed on IDEAS
    2. Philippe Aghion & Céline Antonin & Simon Bunel & Xavier Jaravel, 2020. "What Are the Labor and Product Market Effects of Automation? New Evidence from France," SciencePo Working papers Main hal-03403062, HAL.
    3. Bogliacino, Francesco & Pianta, Mario, 2010. "Innovation and Employment: a Reinvestigation using Revised Pavitt classes," Research Policy, Elsevier, vol. 39(6), pages 799-809, July.
    4. David H. Autor, 2015. "Why Are There Still So Many Jobs? The History and Future of Workplace Automation," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 3-30, Summer.
    5. Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2020. "Automation and labor force participation in advanced economies: Macro and micro evidence," European Economic Review, Elsevier, vol. 126(C).
    6. repec:hal:spmain:info:hdl:2441/3n1gbsj6rs80ipqv9d42nfd0ge is not listed on IDEAS
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    More about this item

    Keywords

    Automation; Employment; Firm heterogeneity; Imports; Technology adoption.;
    All these keywords.

    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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