How Big of an Impact Do Robots Have on Jobs and Wages?David Wagman | March 30, 2017
A new study by researchers at the Massachusetts Institute of Technology (MIT) and Boston University suggests that a single industrial robot may reduce employment by 5.6 workers and depress wages by 0.25% to 0.5%.
Researchers Daron Acemoglu of MIT and Pascual Restrepo of Boston University focused on industrial robots, which they say rose fourfold in number in the U.S. and Western Europe between 1990 to 2007, or around one robot for thousand workers.
Automation, robots, and artificial intelligence are having a transformative effect on labor markets in the U.S. and other advanced economies, the researchers say. Robots, in particular industrial robots, are anticipated to spread rapidly in the next several decades and assume tasks previously performed by labor. These changes are accompanied by concerns about the future of jobs and wages.
The researchers cite International Federation of Robotics (IFR) estimates that anywhere from 1.5 and 1.75 million industrial robots are currently in operation. That number could increase to 4 to 6 million by 2025.
The automotive industry deploys 39% of existing industrial robots, followed by the electronics industry (19%), metal products (9%), and the plastic and chemicals industry (9%).
The researchers say that greater penetration of robots into the economy affects wages and employment negatively because of a "displacement effect" (by directly displacing workers from tasks they were previously performing), but also positively because of a "productivity effect" (as other industries and/or tasks increase their demand for labor).
Impact of Imports
The researchers say that their estimates remain "negative and significant" when controlled for broad industry composition (including shares of manufacturing, durables, and construction), for detailed demographics, and for competing factors impacting workers—in particular, exposure to imports from China, exposure to imports from Mexico, the decline in routine jobs following the use of software to perform information processing tasks, and offshoring of intermediate inputs.
The team also document that their measure of exposure to robots is unrelated to past trends in employment and wages from 1970 to 1990, a period that preceded the onset of rapid advances in robotics technology around 1990.
The study shows that the employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots. These include routine manual, blue collar, assembly and related occupations; and for workers with less than college education. The researchers, however, found no evidence of "positive and offsetting employment gains" in any occupation or education groups. They further found that the effects of robots on men and women are similar, although the impact on male employment was found to be more negative.
The researchers say that because there are relatively few robots in the U.S. economy, the number of jobs lost due to robots has been limited so far (ranging between 360,000 and 670,000 jobs). However, they say that if the spread of robots proceeds as expected by experts over the next two decades, the future aggregate implications of the spread of robots could be much more sizable. In one scenario, the world stock of robots could quadruple by 2025. This would correspond to 5.25 more robots per thousand workers in the United States.