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

Author

Listed:
  • Philippe Aghion

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CdF (institution) - Collège de France)

  • Céline Antonin

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Simon Bunel

    (Banque de France - Banque de France - Banque de France)

  • Xavier Jaravel

    (LSE - London School of Economics and Political Science)

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.

Suggested Citation

  • Philippe Aghion & Céline Antonin & Simon Bunel & Xavier Jaravel, 2023. "The Local Labor Market Effects of Modern Manufacturing Capital: Evidence from France," PSE-Ecole d'économie de Paris (Postprint) halshs-04154438, HAL.
    • Handle: RePEc:hal:pseptp:halshs-04154438
    DOI: 10.1257/pandp.20231039
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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