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Preprints, Working Papers, ... (Working Paper) Year : 2022

Modern manufacturing capital, labor demand, and product market dynamics: Evidence from France

Abstract

We use comprehensive micro data in the French manufacturing sector between 1995 and 2017 to document the effects of a fall in the cost of investments in modern manufacturing capital, including modern automation technologies, on employment, wages, sales, prices, and business stealing. Causal effects are estimated with event studies and a shift-share IV design leveraging predetermined supply linkages and productivity shocks across foreign suppliers of manufacturing capital. At all levels of analysis-plant, firm, and industry-the estimated impact of capital investments on employment is positive, even for unskilled industrial workers. Furthermore , we find that capital investments lead to higher sales and exports, higher profits, and lower consumer prices, while wages and wage inequality remain unchanged. We estimate a positive industry-level employment response to manufacturing capital investments only in industries that are exposed to import competition, due to business-stealing across countries. Thus, typical investments in modern manufacturing capital lead to an increase in domestic labor demand and promote competitiveness in international markets.
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Dates and versions

hal-03943312 , version 1 (17-01-2023)

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  • HAL Id : hal-03943312 , version 1

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Philippe Aghion, Céline Antonin, Simon Bunel, Xavier Jaravel. Modern manufacturing capital, labor demand, and product market dynamics: Evidence from France. 2022. ⟨hal-03943312⟩
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