Seminar  |  02/20/2019 | 12:00 PM  –  01:30 PM

Brown Bag Seminar: Labor Supply and Automation Innovation

12:00 - 1:30 p.m., Carsten Feuerbaum (KU Eichstätt-Ingolstadt) 

Max Planck Institute for Innovation and Competition, Munich, Room 313

While economic theories (e.g. Hicks (1932); Acemoglu (2010)) suggest substitutability between labor and automation innovation, the relationship between labor supply and investments into automation innovation has so far escaped empirical examination. We analyze the local impact of changes in labor factor endowments on innovative activities by exploiting a placement policy that led to exogeneous inflows of immigrants during the 1990s and 2000s in Germany. Our results indicate that these positive shocks of low-skilled labor supply were followed by an absolute as well as relative decline in automation innovation. This pattern is consistent with the substitutability hypothesis on labor and labor-saving innovation. Subgroup analyses reveal effect heterogeneity by pre-existing labor market tightness. We further show that these inflows did not impact the level of non-automation innovation.

Contact: Michael Rose