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

95 Pages Posted: 5 Feb 2019 Last revised: 22 Jan 2022

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

Utrecht University; CPB Netherlands Bureau of Economic Policy Analysis

Date Written: January 1, 2019

Abstract

We estimate the impact of firm-level automation on individual worker outcomes
by combining Dutch micro-data with a direct measure of automation expenditures
covering all private non-financial sector firms. Using a novel difference-in-differences
event-study design leveraging lumpy investment, we find that automation increases
the probability of incumbent workers separating from their employers. Workers
experience a 5-year cumulative wage income loss of 9 percent of one year’s earnings,
driven by decreases in days worked. These adverse impacts of automation are larger
in smaller firms, and for older and middle-educated workers. In contrast, no such
losses are found for firms’ investments in computers.

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 1, 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

Utrecht University ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

CPB Netherlands Bureau of Economic Policy Analysis ( email )

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

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