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Labor Supply and Automation Innovation
... 2 Andersson, Karadja and Prawitz (2020) look at the effect of emigration to the US in the 19 th century in Sweden and find that more exposed municipalities experienced an increase in innovation (but they do not identify automation innovations). In a paper subsequent to ours, Danzer, Feuerbaum and Gaessler (2020) exploit German immigrant settlement policy to show that increases in labor supply discourage local automation innovation, while we exploit firm-level variation and focus on the effect of labor cost on global innovation. A large literature shows that the direction of innovation is endogenous in other contexts (e.g. ...
Do higher wages lead to more automation innovation? To answer this question, we first use the frequency of certain keywords in patent text to create a new measure of automation innovation in machinery. We show that our measure is correlated with a reduction in routine tasks in a cross-sectoral analysis in the US. We combine macroeconomic data from 41 countries and information on geographical patent history to build firm-specific measures of low- and high-skill wages. In a firm-level panel analysis, we find that an increase in low-skill wages leads to more automation innovation with an elasticity between 2 and 5. Placebo regressions show that the effect is specific to automation innovations. Finally, we focus on a specific labor market shock, the German Hartz reforms, and show that they reduced automation innovations by those non-German firms relatively more exposed to Germany.
We provide quantitative evidence on the relationship between military spending and innovation in the 19th century. Combining innovation data from world fairs and historical military data across Europe, we show that national military spending is associated with national innovation toward war logistics such as food processing, but less toward war technology such as guns. This innovation pattern reflects differences in the historical markets for war supplies: while the armed forces sourced weapons globally, the food market remained local.
Has skilled immigration into the UK led to a reduction in the training of native‐born workers? To address this concern, this paper describes a theoretical model where immigration can affect the training of native‐born workers both positively and negatively, and where its effects may differ according to the characteristics of the migrant and of the training firm's sector. It then investigates this issue empirically using UK Labour Force Survey data from 1995 to 2018. At the aggregate level, there is a small positive association between skilled immigration and native training rates. However, a more disaggregated analysis finds that the relationship between immigration and native training depends on the skill level of the immigrant, the skill level of trainees, and the sector into which immigration occurs. In particular, traded goods sectors show a positive association between training of UK‐born workers and both unskilled and skilled immigration. In non‐traded high‐wage sectors, the association between skilled immigration and UK‐born training is negative. These findings highlight the importance of allowing for heterogeneous effects from immigration when formulating policy or when modelling immigration's effects across the wider economy.
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