--- title: "Labor supply and automation innovation: Evidence from an allocation policy · AI Fault Line" url: https://aifaultline.com/research/p/doi-10-1016-j-jpubeco-2024-105136/ description: "AI Fault Line is a neutral, evidence-cited field guide to why experts looking at the same developments disagree about AI's effect on productivity, jobs, inequality, regulation and the pace of change." --- [Research](https://aifaultline.com/research/) # Labor supply and automation innovation: Evidence from an allocation policy Alexander M. Danzer, Carsten Feuerbaum, Fabian Gaessler · Journal of Public Economics · 22 May 2024 [Read original source](https://doi.org/10.1016/j.jpubeco.2024.105136) Open access Where this sits in the debate - [Will AI destroy more jobs than it creates?](https://aifaultline.com/debate/jobs/) Direction of the finding as read from the abstract by an AI model ([AI-written](https://aifaultline.com/about/)). ## 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](https://aifaultline.com/about/#source-ranking). Published 2024 (29 months ago) Citations 19 (OpenAlex) ## Citations in context [Chart: 19 citations, cohort median 47] 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. [Chart: published 2024] □ added to this collection in 2026. author affiliation matches seed institution university college london — part of why this paper is in the collection. ## More on this topic Related by theme, not necessarily by method or conclusion. - [The Effects of Generative AI on High Skilled Work: Evidence from Three Field Experiments with Software Developers](https://aifaultline.com/research/p/doi-10-2139-ssrn-4945566/) SSRN · 2024 - [GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models](https://aifaultline.com/research/p/doi-10-48550-arxiv-2303-10130/) arXiv · 2023 - [Extending “GPTs Are GPTs” to Firms](https://aifaultline.com/research/p/doi-10-1257-pandp-20251045/) AEA Papers and Proceedings · 2025 - [New Frontiers: The Origins and Content of New Work, 1940–2018](https://aifaultline.com/research/p/doi-10-1093-qje-qjae008/) The Quarterly Journal of Economics · 2024 Overview assembled automatically from collected metadata. [How this site is built](https://aifaultline.com/about/).