Robots, Tools, and Jobs: Evidence from Brazilian Labor Markets

Abstract

How do robots and tools affect employment and labor market inequality?Using natural language processing and an instrumental variable approach, we discover that robots lead to a sizable decrease in the employment and wages of low-skilled workers in operational occupations.However, tools, i.e., machines that complement labor, lead to an equally large reinstatement of these workers, increasing their employment and wages.Using a quantitative model, we find that the lower prices of robots and tools over the last 20 years have reduced labor market inequality and increased welfare without significantly affecting employment.