2021/25 | LEM Working Paper Series | ||||||||||||||||
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For whom the bell tolls: the firm-level effects of automation on wage and gender inequality |
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Giacomo Domini, Marco Grazzi, Daniele Moschella and Tania Treibich |
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Keywords | |||||||||||||||||
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Automation; AI; wage inequality; gender pay gap.
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JEL Classifications | |||||||||||||||||
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D25, J16, J31, L25, O33
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Abstract | |||||||||||||||||
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This paper investigates the impact of investment in automation- and AI-
related goods on within-firm wage inequality in the French economy during
the period 2002-2017. We document that most of wage inequality in France
is accounted for by differences among workers belonging to the same firm,
rather than by differences between sectors, firms, and occupations. Using an
event-study approach on a sample of firms importing automation and AI-related
goods, we find that spike events related to the adoption of automation- or
AI-related capital goods are not followed by an increase in within-firm wage
nor in gender inequality. Instead, wages increase by 1% three years after the
events at different percentiles of the distribution. Our findings are not linked to
a rent-sharing behavior of firms obtaining productivity gains from automation
or AI adoption. Instead, if the wage gains do not differ across workers along the
wage distribution, worker heterogeneity is still present. Indeed, aligned with the
framework in Abowd et al. (1999b), most of the overall wage increase is due to
the hiring of new employees. This adds to previous findings showing picture of a
‘labor friendly’ effect of the latest wave of new technologies within adopting firms.
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