--- title: "Induced Automation Innovation: Evidence from Firm-Level Patent Data · AI Fault Line" url: https://aifaultline.com/research/p/doi-10-1086-734778/ 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/) # Induced Automation Innovation: Evidence from Firm-Level Patent Data [David Hémous](https://aifaultline.com/authors/david-hemous/), [Morten Olsen](https://aifaultline.com/authors/network/#map=morten-olsen), [Carlo Zanella](https://aifaultline.com/authors/network/#map=carlo-zanella), [Antoine Dechezleprêtre](https://aifaultline.com/authors/network/#map=antoine-dechezlepretre) · Journal of Political Economy · 13 Jan 2025 [Read original source](https://doi.org/10.1086/734778) 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 Do higher wages induce more automation innovation? We identify automation patents in machinery. We show that a higher automation intensity predicts a decline in routine tasks across US sectors. Then, we estimate how innovating firms respond to changes in their downstream firms’ low- and high-skill wages. We compute these wages by combining macroeconomic data on 41 countries with innovating firms’ global market exposure. Higher low-skill wages increase automation innovation (but not other machinery innovation), with an elasticity of 2–5. Finally, we show that the German Hartz labor market reforms reduced automation innovations by foreign firms more exposed to Germany. ## About this publication **Top journal.** One of the journals economics departments rank highest: the “top five” economics journals, and the general-science journals Science and Nature. Placed by: Top five economics journals. [How sources are ranked](https://aifaultline.com/about/#source-ranking). Published 2025 (21 months ago) Citations 29 (OpenAlex) ## Citations in context [Chart: 29 citations, cohort median 10] 29 citations — 76th percentile among the 33 indexed papers from 2025 in this collection. Citation counts favor older papers; this compares only same-year papers here, not the whole literature. [Chart: published 2025] □ added to this collection in 2026. David Hémous signed the wemustactnow.ai letter · author affiliation matches seed institution university of zurich — 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/).