Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240525 
Year of Publication: 
2021
Series/Report no.: 
IFN Working Paper No. 1382
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We propose a model with asymmetric firms where new technologies displace workers. We show that both leading (low-cost) firms and laggard (high-cost) firms increase productivity when automating but that only laggard firms hire more automation-susceptible workers. The reason for this asymmetry is that in laggard firms, the lower incentive to invest in new technologies implies a weaker displacement effect and thus that the output-expansion effect on labor demand dominates. Using novel firm-level automation workforce probabilities, which reveal the extent to which a firms' workforce can be replaced by new AI and robotic technology and a new shiftshare instrument to address endogeneity, we find strong empirical evidence for these predictions in Swedish matched employer-employee data.
Subjects: 
AI&R Technology
Automation
Job displacement
Firm Heterogeneity
Matched employer-employee data
JEL: 
D2
J24
L2
O33
Document Type: 
Working Paper

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