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

Philippe Aghion (), Céline Antonin, Simon Bunel and Xavier Jaravel
Additional contact information
Philippe Aghion: INSEAD - Institut Européen d'administration des Affaires, LSE - London School of Economics and Political Science, Collège de France - Chaire Economie des institutions, de l'innovation et de la croissance - CdF (institution) - Collège de France
Simon Bunel: Institut national de la statistique et des études économiques (INSEE), Centre de recherche de la Banque de France - Banque de France, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

SciencePo Working papers Main from HAL

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.

Keywords: modern manufacturing capital investments productivity France; modern manufacturing capital; investments; productivity; France (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-eur
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03943312v1
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://sciencespo.hal.science/hal-03943312v1/document (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 (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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03943312

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().