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  4. May 2023
  5. The Local Labor Market Effects of Modern Manufacturing Capital: Evidence from France

The Local Labor Market Effects of Modern Manufacturing Capital: Evidence from France

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Abstract

Using an event study methodology and comprehensive micro data from the French manufacturing sector, we analyze the local labor market effects of investments in modern manufacturing capital, including modern automation technologies. We estimate that commuting zones with higher investments in modern manufacturing capital and automation benefit from higher labor demand, with an increase in both local employment and wages. Our findings are consistent with a task-based model where the productivity effects of modern capital investments and automation outweigh their displacement effect.

Citation

Aghion, Philippe, Celine Antonin, Simon Bunel, and Xavier Jaravel. 2023. "The Local Labor Market Effects of Modern Manufacturing Capital: Evidence from France." AEA Papers and Proceedings, 113: 219-23. DOI: 10.1257/pandp.20231039

Additional Materials

JEL Classification

  • D22 Firm Behavior: Empirical Analysis
  • G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
  • G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
  • J23 Labor Demand
  • L60 Industry Studies: Manufacturing: General
  • M51 Personnel Economics: Firm Employment Decisions; Promotions
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics