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Automation, Labor Share, and Productivity: Plant-Level Evidence from U.S. Manufacturing

September 2018

Working Paper Number:

CES-18-39

Abstract

This paper provides new evidence on the plant-level relationship between automation, labor and capital usage, and productivity. The evidence, based on the U.S. Census Bureau's Survey of Manufacturing Technology, indicates that more automated establishments have lower production labor share and higher capital share, and a smaller fraction of workers in production who receive higher wages. These establishments also have higher labor productivity and experience larger long-term labor share declines. The relationship between automation and relative factor usage is modelled using a CES production function with endogenous technology choice. This deviation from the standard Cobb-Douglas assumption is necessary if the within-industry differences in the capital-labor ratio are determined by relative input price differences. The CES-based total factor productivity estimates are significantly different from the ones derived under Cobb-Douglas production and positively related to automation. The results, taken together with earlier findings of the productivity literature, suggest that the adoption of automation may be one mechanism associated with the rise of superstar firms.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
demand, production, manufacturing, industrial, productivity growth, technology, growth, technical, technological, tech, manufacturer, labor productivity, productivity increases, labor, produce, factor productivity, factory, expenditure, economically, workforce

Tags Tags are automatically generated using a pretrained language model from spaCy, which excels at several tasks, including entity tagging.

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:
Annual Survey of Manufactures, Center for Economic Studies, Ordinary Least Squares, Total Factor Productivity, Cobb-Douglas, Fabricated Metal Products, Survey of Manufacturing Technology, Census of Manufacturing Firms, Generalized Method of Moments

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