Automation and Employment over the Technology Life Cycle: Evidence from European Regions

CESifo Working Paper No. 10987

This paper examines the impact of digital automation technologies—ICT, robots, and software and databases—on European regional labor markets during different investment phases of technology life cycles from 1995 to 2017. We first identify major breakthroughs and phases of investment acceleration and deceleration that characterize these life cycles. We then examine how exposure to these technologies affects employment and wages during various life cycle phases. We find both positive and negative short-term effects of automation on employment within these phases, which tend to offset each other in the long run. The impact on employment rates varies by technology and phase: ICT and software have significant effects in high-productivity, service-specialized regions, while for robots, the life cycle phases are more critical than regional characteristics in explaining employment impacts.