Journal article
Automation and the displacement of labor by capital: asset pricing theory and empirical evidence
- Abstract:
- I examine the asset pricing implications of technological innovations that allow capital to displace labor: automation. I develop a theory in which firms with displaceable labor are negatively exposed to such technology shocks. In the model, firms optimally adopt technology to gain competitive advantage but in equilibrium competition erodes profits and decreases firm value. Empirically, I find that firms with high share of displaceable labor have negative exposure to technology shocks. A long-short portfolio sorted on this variable mimics macroeconomic measures of technology shocks. Negatively exposed firms earn a 4% annual return premium consistent with displacement risk from technological progress.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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(Preview, Version of record, pdf, 2.4MB, Terms of use)
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- Publisher copy:
- 10.1016/j.jfineco.2022.11.003
Authors
Bibliographic Details
- Publisher:
- Elsevier
- Journal:
- Journal of Financial Economics More from this journal
- Volume:
- 147
- Issue:
- 2
- Pages:
- 271-296
- Publication date:
- 2022-11-24
- Acceptance date:
- 2022-11-07
- DOI:
- EISSN:
-
1879-2774
- ISSN:
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0304-405X
Item Description
- Language:
-
English
- Keywords:
- Pubs id:
-
1311560
- Local pid:
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pubs:1311560
- Deposit date:
-
2022-12-06
Terms of use
- Copyright holder:
- Jiří Knesl
- Copyright date:
- 2022
- Rights statement:
- © 2022 The Author. Published by Elsevier B.V. This is an open access article under the CC BY license ( http://creativecommons.org/licenses/by/4.0/ )
- Licence:
- CC Attribution (CC BY)
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