Factory Automation, Labor Demand, and Market Dynamics

This study provides micro-level evidence on the labor market effects of historical au- tomation technology by studying early 20th century powerloom adoption in Japan’s silk-weaving industry. Relative to non-adopting factories in the same area, adopting factories employed more male mechanics but did not reduce female weaver employ- ment. Meanwhile, wages rose only modestly despite large productivity gains. At the industry level, however, the exit of low-wage, low-productivity plants led to sub- stantial net job losses—“technological unemployment†—and stronger overall wage growth. Nature of the technology, monopsony power, and market competition were all important in shaping these outcomes.