Firm Heterogeneity and the Labor Market Effects of Automation

This project studies how automation affects firms and workers—and why the effects differ across firms. Using unique Swedish matched employer–employee data, we examine how exposure to new technologies such as robots, software, and AI influences productivity and employment. We find that both leading and lagging firms become more productive when they automate. However, only lagging firms expand employment among workers whose jobs are most at risk from automation. This suggests that diversity among firms can act as a safeguard, softening the impact of rapid technological change on overall labor demand.