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

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