How industrial robots affect labor income share in task model: Evidence from Chinese A-share listed companies

Abstract

This paper analyses the impact of the use of industrial robots on labor income shares at both the theoretical and empirical levels. On the theoretical side, the role of induced technological progress, the creation of new tasks, and the penetration of industrial robots on labor income shares are systematically explored by incorporating industrial robots into task models and endogenizing the task induced technological progress. Empirically, industrial robot penetration at the regional level in China is constructed from the industrial robots data released by the International Federation of Robotics (IFR), which is matched with Chinese A-share listed companies in 2011–2019, and the causal strategy of Bartik-style instrumental variables is used to analyze the impact of the penetration of industrial robots and task induced technological progress on the share of labor income. The study shows that the penetration of industrial robots significantly increases the share of labor income, but the task induced technological progress reduces the share of labor income, and that the impact of the penetration of industrial robots varies significantly external financing dependence, ownership, and regions. From the perspective of the impact mechanism, robot penetration increase the levels of inputs complementarity and hence reduce the elasticity of substitution between robots and labor. Meanwhile, robots can effectively increase the wage level of the labor force, thus increasing the labor income share. The findings of this paper provide a decision-making reference for how industrial robots can better serve human beings in the new era so that workers can share the fruits of economic development. • It presents a theoretical model integrating robots into profit-maximizing tasks to assess their impact on labor income share. • Robot penetration affects labor income share across external financing dependence, ownership, and regions. • Increased robot penetration raises the labor share through effects on the elasticity of substitution and wages.