When the Tax Machine Cometh: Who Benefits from Automation?

• In Event: Behavioral Firms and the Tax System

Abstract

How do employers respond to automation shocks? We investigate this question using a randomized information intervention that exogenously shifts employers' beliefs about automation rates of their workforce. Focusing on the tax consulting and auditing sectors—where well-defined job titles and high exposure to generative language models create credible automation potential - we assign firms to one of three treatment groups or a control group. Treated firms revise revenue and profit expectations upward but do not alter hiring or firing decisions, suggesting automation enhances efficiency without immediate labor displacement. Notably, wages remain unchanged, indicating firms intend to retain productivity gains rather than share them with employees.

Author

• Davud Rostam-Afschar, University of Mannheim