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CIT-IRP5

Government Technical Advisory Centre (GTAC)Ref: CIT-IRP5

Official source

Source domain: gtac.gov.za

Collected on 31 July 2026

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Our copy (archived 31 July 2026)Official source

What this means

This document is a slide-style research presentation titled “Automation and inequality within firms: Evidence from South Africa” by Rafael de la Vega, Tim Kӧhler, Antonio Martins-Neto, and Siphelele Ngidi. It presents a study using matched employer-employee tax microdata for South Africa’s formal manufacturing sector (2014–2021) to estimate causal effects of automation adoption on employment, earnings, and within-firm wage inequality. The results reported are that automation adoption reduces employment, shows no average effect on earnings, but increases within-firm earnings inequality in the short term, driven by changes in employment composition (especially affecting middle-wage workers in routine manual tasks).

Facts

Places

City of Tshwane, Gauteng, City of Cape Town, Western Cape

Reference

CIT-IRP5

Key Takeaways

  • Title: Automation and inequality within firms: Evidence from South Africa
  • Authors: Rafael de la Vega; Tim Kӧhler; Antonio Martins-Neto; Siphelele Ngidi
  • Event: GTAC Public Economics Conference, Pretoria
  • Date: July 2026
  • Study period/data: 2014–2021
  • Sector: South Africa’s formal manufacturing sector
  • Data: matched employer-employee tax admin microdata (universe of firms and workers)
  • Firm data: CIT-IRP5 panel; job data: IRP5 employee tax certificates
  • Automation measure: imports of focal capital goods (6-digit HS codes) tied to automating manufacturing work
  • Method: staggered semi-parametric Difference-in-Differences (Callaway & Sant, 2021) using automation “spike” (first year of highest firm-specific import value)
  • Outcomes: employment; mean earnings; within-firm inequality (GE with alpha 0, 1, 2)
  • Reported findings: automation reduces employment; no evidence of effect on average earnings; positive short-term effect on within-firm earnings inequality
  • Inequality mechanism: employment composition effects rather than earnings changes; concentrated on middle-wage workers in routine manual tasks
  • Focal capital goods categories include: automatic data processing machinery, automatic machine tools, dedicated machinery, automatic regulating instruments, automatic conveyors, automatic welding machines, 3-D printers, industrial robots, weaving and knitting machines, electronic calculating machines
  • Rafael de la Vega
  • Tim Kӧhler
  • Antonio Martins-Neto
  • Siphelele Ngidi
  • UNU-MERIT
  • Development Policy Research Unit, University of Cape Town
  • World Bank
  • Southern Centre for Inequality Studies, University of the Witwatersrand
  • GTAC Public Economics Conference
  • University of Cape Town
  • University of the Witwatersrand
  • Callaway & Sant (2021)
  • Kerr (2020)
  • Bhorat et al., 2023