How Does Capital Investment Affect Workers? Evidence from Bonus Depreciation and Matched Employer-Employee Data

Awarded Scholars:
Juan Carlos Suárez Serrato, Duke University
E. Mark Curtis, Wake Forest University
Eric Ohrn, Grinnell College
Project Date:
Jul 2019
Award Amount:
$145,050

Many researchers and policymakers have expressed concerns that new technologies will lower the effective cost of capital and lead firms to replace workers with machines, especially those with limited skills. Will increasing capital accumulation increase inequality between skilled and unskilled workers? Does capital investment increase employment or leads firms to substitute between capital and labor? Suárez Serrato, Curtis and Ohrn will study the effects of capital investments on worker outcomes. Specifically, they will analyze the effects of bonus depreciation, a tax policy designed to stimulate business investment. By comparing workers in firms who are more affected by the policy to other workers, they will explore the degree to which capital investment harms or benefits workers, and whether it affects inequality within firms and across skill levels.

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