Mitigating the labor displacing effects of automation through a robot tax: evidence from a survey experiment

Abstract

We examine how taxation might influence the relationship between automation and employment dynamics. The results obtained through a survey experiment with 2,000 entrepreneurs residing in the U.S. show that the implementation of a robot tax leads to a significant decrease in the inclination of entrepreneurs to reduce workforce levels. Conversely, an equal but negative robot tax, functioning as a reward for automation, motivates entrepreneurs to downsize their workforce. Nevertheless, the impact of the former outweighs that of the latter. Among participants who place higher value on automation we observe a 0.174 increase in the log-odds of reducing the workforce and a 0.312 decrease in the log-odds of reducing automation equipment. These changes are statistically significant at the 1% level. With respect to possible gender effects, male entrepreneurs are found to have a greater likelihood of firing employees, regardless of the treatment.