Advanced Technology Adoption: Selection or Causal Effects?

Abstract

This paper uses data from the 2019 Annual Business Survey to document that firms adopting advanced technologies are larger in terms of employment than other firms in their same industry and cohort. Using data from the Longitudinal Business Survey, we show that adopters were already large and growing faster before artificial intelligence, robotics, cloud computing, and specialized software systems became broadly available. These findings support the view that adopters are large because of selection and not because adopting advanced technologies for automation causally expands their employment.