Title: Aggregate Labor Share and Firm-level Automation
(The paper is a joint work with Aseem Patel and Christian Siegel)
Abstract: "It is a common view that automation technologies have contributed to the decline in the labor income share in value added. Such technologies should be reflected in changes in the occupational employment structure at the firm level. However, using matched employer-employee data from France over 1994–2019, we show that there is no connection between a firm’s routine employment share change and its labor share change. In France routinization is a very wide-spread phenomenon. In terms of the labor share, there has been a steady increase in its average across firms, while in the aggregate it hardly changed between 1994 and 2019. This points to a large reallocation of value added towards lower labor share firms. We complement the descriptive analysis by a structural accounting exercise where we allow for occupation-specific technologies to vary across firms and over time. Our model-based counterfactual experiments reveal that the main driver of the reallocation of value added towards lower labor share firms is the reduction in the rental rate of capital, while firm-specific technologies are responsible for the declining routine employment share. Therefore, automation did not put a downward pressure on the labor income share in France."