From Immigrants to Robots: The Changing Locus of Substitutes for Workers

Abstract

Using numbers of industrial robots shipped to primarily manufacturing industries as a supply shock to an industry labor market, we estimate that an additional robot reduces employment by roughly two to three workers overall and by three to four workers when robots are likely to be good substitutes for humans. The supply shock also reduces wages. The estimates far exceed those of an additional immigrant on employment and wages. While growth of robots in the 2000s was too modest to be a major determinant of wages and employment, the estimated effects suggest that continued exponential growth of industrial robots could disrupt job markets in the foreseeable future and thus merit attention from analysts and policymakers concerned about the economic well-being of workers.