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Robots & the Rise of European Superstar Firms

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  • Jens Suedekum
  • Nicole Woessner

Abstract

We estimate the impact of a recent digital automation technology - industrial robotics - on the distribution of productivity and markups within industries. Our empirical analysis combines data on the industry-level stock of industrial robots with firms' balance sheet data for six European countries from 2004 to 2013. We find that robots dis-proportionally raise productivity in those firms that are already most productive to begin with. Those firms are able to increase their markups, while markups tend to decline for less profitable firms within the same industry, country and year. We also show that industrial robots contribute to the falling aggregate labour income share through a rising concentration of industry sales. In short, our paper suggests that robots boost the emergence of superstar firms within European manufacturing, and thereby shifts the functional income distribution away from wages and towards profits.

Suggested Citation

  • Jens Suedekum & Nicole Woessner, 2019. "Robots & the Rise of European Superstar Firms," European Economy - Discussion Papers 118, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:118
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    1. Ndubuisi, Gideon & Otioma, Chuks & Tetteh, Godsway Korku, 2021. "Digital infrastructure and employment in services: Evidence from Sub-Saharan African countries," Telecommunications Policy, Elsevier, vol. 45(8).

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    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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