2023/37 | LEM Working Paper Series | ||||||||||||||||
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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 and Daniele Moschella |
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Keywords | |||||||||||||||||
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Automation; Employment; Firm heterogeneity; Imports; Technology
adoption.
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JEL Classifications | |||||||||||||||||
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D24, J23, L25, O33
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Abstract | |||||||||||||||||
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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.
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