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

Philippe Aghion, Céline Antonin, Simon Bunel and Xavier Laurent Jaravel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 pre-determined 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. Further-more, 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.

Keywords: modern manufacturing capital; investments; productivity; France (search for similar items in EconPapers)
JEL-codes: L00 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2023-03-29
New Economics Papers: this item is included in nep-tid
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http://eprints.lse.ac.uk/121340/ Open access version. (application/pdf)

Related works:
Working Paper: Modern manufacturing capital, labor demand and product market dynamics: evidence from France (2023)
Working Paper: Modern Manufacturing Capital, Labor Demand and Product Market Dynamics: Evidence from France (2023)
Working Paper: Modern manufacturing capital, labor demand, and product market dynamics: evidence from France (2022)
Working Paper: Modern manufacturing capital, labor demand, and product market dynamics: Evidence from France (2022)
Working Paper: Modern manufacturing capital, labor demand, and product market dynamics: Evidence from France (2022)
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