Benign Effects of Automation: New Evidence from Patent Texts

• Published in: Policy File 2023
• Main Authors: Mann, Katja, Puttmann, Lukas
• Format: Report
• Language: English
• Subjects: Automation; Economic impact; Employment

What is the effect of automation technology on employment? This question has received significant attention in public discourse and among researchers, but answers differ widely and depend on the definition of automation. In economics, automation is often understood as a type of labor‐​saving technology that reduces the demand for human workers at specific tasks. But automation technology could also create new products or lead to productivity improvements with no immediate replacement of human labor. Examples are printers, adaptive cruise control, and programs for automatic email management, which do not necessarily automate existing human tasks but may still affect employment. Our research finds that automation increases total employment, but the effect varies by industry. We developed an approach to measure automation comprehensively from patent texts and began with a wide technological definition of automation without presupposing the effects, if any, that automation has on employment. Our definition encompasses diverse areas, including software, robotics, or any other physical or immaterial innovations involving a device that carries out a process independently of human intervention. Patents are a natural candidate for measuring technological progress and frequently serve as proxies of innovation. Although the number of patents and patent metadata are often used as measures, the text of patents has not been the focus of prior work. We classified automation patents based on a standard technology‐​based encyclopedia definition of automation: a device that carries out a process independently.