Automation does not lower the labour share



The rapid diffusion of generative AI has revived fears that a new wave of automation will inevitably shift income away from workers. This column uses data covering nearly the universe of French firms between 1994 and 2019 to test the relationship between automation and the labour share of income at the firm level. While firms clearly automated extensively over this period, the evidence shows that it can profoundly reshape jobs and production without necessarily shifting income from labour to capital.



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