Abstract:
We examine the effects of automation on firm performance and the labour market in the context of an emerging economy. To do this, we leverage unique administrative data on the universe of manufacturing firms in South Africa to identify causal evidence of firm-level outcomes from automation adoption. In the event-study design, we derive direct effects of automation on automating firms, the spillover effects on nonautomating firms, and employment within the industry and location. Specifically, our results show that automated firms doubled production and value addition (VA) in the first four years of automation. We also find that the adoption of automation resulted in a robust increase in VA per worker, markup, and total factor productivity of approximately 86-97% within the first four years of automation. The study further shows that automation increases employment and average wages and reduces employee turnover in automating firms. However, we find no significant firm-level spillovers on non-automating firms in the same industry and location.