Threats and opportunities in the digital era: Automation spikes and employment dynamics

This paper investigates the change in worker flows (i.e. net growth, but also hiring and separation rates) around an investment in automation-intensive goods and, within firms, across occupational categories. Resorting to an integrated dataset encompassing detailed information on firms, their imports, and employer-employee data for French manufacturing employers over the period 2002–2015, we identify ‘automation spikes’ using imports of capital goods embedding automation technologies. Even after controlling for firms’ non-random selection into automation, we find that automation spikes are linked to an increase in firms’ contemporaneous net employment growth rate, jointly explained by a higher hiring rate and a lower separation rate. Furthermore, we find that automation spikes are not associated with significant changes in the composition of the workforce (in terms of 1-digit and 2-digit occupational categories, and routine-intensive vs. non routine-intensive jobs).