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Labor supply and automation innovation: Evidence from an allocation policy

Alexander M. Danzer, Carsten Feuerbaum, Fabian Gaessler · Journal of Public Economics · 22 May 2024

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Abstract

Despite a longstanding interest in the potential substitution of labor and capital, limited empirical evidence exists regarding the causal relationship between labor supply and the development of labor-saving technologies. This study examines the impact of exogenous changes in regional labor supply on automation innovation by leveraging a German immigrant allocation policy during the 1990s and 2000s. The findings reveal that an increase in the low-skilled workforce reduces automation innovation, as measured by patents. This reduction is most pronounced for large firms within the manufacturing sector and primarily concerns process-related automation innovations. This suggests that the effect is channeled through changes in internal demand for automation innovation. Consistent with a labor scarcity mechanism, the effect is confined to tight labor markets.

About this publication

Leading field journal. A leading journal in economics or a neighbouring field (on the Tinbergen Institute’s A list or near the top of the RePEc ranking), or a top-rated computer-science venue.

Placed by: Tinbergen Institute A list. How sources are ranked.

Published
2024 (29 months ago)
Citations
19 (OpenAlex)

Citations in context

median 47 this paper: 19 0 202

19 citations — 26th percentile among the 23 indexed papers from 2024 in this collection. Citation counts favor older papers; this compares only same-year papers here, not the whole literature.

2020202120222023202420252026 published

□ added to this collection in 2026.

author affiliation matches seed institution university college london — part of why this paper is in the collection.

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