Working Paper: CEPR ID: DP15080
Authors: Jens Sdekum; Joel Stiebale; Nicole Woessner
Abstract: We study the impact of a recent digital automation technology - industrial robotics - on the distribution of sales, productivity, markups, and profits within industries. Our empirical analysis combines data on the industry-level stock of industrial robots with firms' balance sheet data for six European countries from 2004 to 2013. We find that robots dis-proportionally raise productivity in those firms that are already most productive to begin with. Those firms are able to increase their markups and overall profits, while they tend to decline for less profitable firms within the same industry, country and year. We also show that robots contribute to the falling aggregate labor income share through a rising concentration of industry sales in highly productive firms with low firm-specific labor shares. In sum, our paper suggests that robots boost the emergence of superstar firms within European manufacturing, and thereby shifts the functional income distribution away from wages and towards profits.
Keywords: automation; robots; productivity; markups; labor share; superstar firms
JEL Codes: D4; L11; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| robot adoption (L63) | increased productivity (O49) |
| robot adoption (L63) | higher markups (D49) |
| robot adoption (L63) | declines in markups for less profitable firms (L11) |
| robot adoption (L63) | declining aggregate labor income share (E25) |
| increased productivity (O49) | higher markups (D49) |
| robot adoption (L63) | changes in income distribution dynamics (D31) |