Automatic Reaction - What Happens to Workers at Firms that Automate?

62 Pages Posted: 5 Feb 2019

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Maarten Goos

Utrecht University

Anna Salomons

Utrecht University - School of Economics; KU Leuven - Center for Economic Studies

Wiljan Van den Berge

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: January 2019

Abstract

We provide the first estimate of the impacts of automation on individual workers by combining Dutch micro-data with a direct measure of automation expenditures covering firms in all private non-financial industries over 2000-2016. Using an event study differences-indifferences design, we find that automation at the firm increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of about 8% of one year’s earnings for incumbent workers. We find little change in wage rates. Further, lost wage earnings are only partially offset by various benefits systems and are disproportionately borne by older workers and workers with longer firm tenure. Compared to findings from a literature on mass layoffs, the effects of automation are more gradual and automation displaces far fewer workers, both at the individual firms and in the workforce overall.

Keywords: Automation, Technological Change, Displacement

JEL Classification: J23, J31, J62, J63, O33

Suggested Citation

Bessen, James E. and Goos, Maarten and Salomons, Anna and Van den Berge, Wiljan, Automatic Reaction - What Happens to Workers at Firms that Automate? (January 2019). Boston Univ. School of Law, Law and Economics Research Paper . Available at SSRN: https://ssrn.com/abstract=3328877 or http://dx.doi.org/10.2139/ssrn.3328877

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Maarten Goos

Utrecht University ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Anna Salomons

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Wiljan Van den Berge

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

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