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Title: Automating Labor: Evidence from Firm-level Patent Data

Citation Type: Working Paper

Publication Year: 2020

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Abstract: Do higher wages lead to more automation innovations? And if so, by how much? To answer this question, we build a firm-level panel dataset on automation innovation. We use the frequency of certain keywords in the text of patent data to identify automation patents in machinery. We validate our measure by showing that it is correlated with a reduction in routine tasks in a cross-sectoral analysis. We then use macroeconomic data on 40 countries and information on geographical patent history to build firm-specific measures of low-skill and high-skill wages. We find that an exogenous increase in low-skill wages leads to more automation innovations with an elasticity between 1 and 2.2. An increase in high-skill wages tends to reduce automation innovations. Placebo regressions show that the effect is specific to automation innovations. JEL: O31, O33, J20

Url: https://cep.lse.ac.uk/pubs/download/dp1679.pdf

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Authors: Dechezleprêtre, Antoine; Hémous, David; Olsen, Morten; Zanella, Carlo

Series Title: CEP Discussion Paper

Publication Number: 1679

Institution: Centre for Economic Performance

Pages: 1-107

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Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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