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Wednesday, March 18, 2015

'Estimating the Impact of Robots on Productivity and Employment'

Another article about robots:

Estimating the impact of robots on productivity and employment, by Guy Michaels and Georg Graetz, Vox EU: Robots' capacity for autonomous movement and their ability to perform an expanding set of tasks have captured writers' imaginations for almost a century. Recently robots have emerged from the pages of science fiction novels into the real world, and discussions of their possible economic effects have become ubiquitous (see e.g. The Economist 2014, Brynjolfsson and McAfee 2014). But a serious problem inhibits these discussions – there has so far been no systematic empirical analysis of the effects that robots are already having.
In recent work we begin to remedy this problem (Graetz and Michaels 2015). We compile a new dataset spanning 14 industries (mainly manufacturing industries, but also agriculture and utilities) in 17 developed countries (including European countries, Australia, South Korea, and the US). Uniquely, our dataset includes a measure of the use of industrial robots employed in each industry, in each of these countries, and how it has changed from 1993-2007. We obtain information on other economic performance indicators from the EUKLEMS database (Timmer et al. 2007).
We find that industrial robots increase labor productivity, total factor productivity, and wages. At the same time, while industrial robots had no significant effect on total hours worked, there is some evidence that they reduced the employment of low skilled workers, and to a lesser extent also middle skilled workers. ...

They conclude:

Our findings on the aggregate impact of robots are interesting given recent concerns in the macroeconomic literature that productivity gains from technology in general may have slowed down. Gordon (2012, 2014) expresses a particularly pessimistic view, and there are broader worries about secular macroeconomic stagnation (Summers 2014, Krugman 2014), although others remain more optimistic (Brynjolfsson and McAfee 2014). We expect that the beneficial effects of robots will extend into the future as new robot capabilities are developed, and service robots come of age. Our findings do come with a note of caution: there is some evidence of diminishing marginal returns to robot use, or congestion effects, so robots are not a panacea for growth.
Although we do not find evidence of a negative impact of robots on aggregate employment, we see a more nuanced picture when we break down employment (and the wage bill) by skill groups. Robots appear to reduce the hours and the wage bill shares of low-skilled workers, and to a lesser extent also of middle skilled workers. They have no significant effect on the employment of high-skilled workers. This pattern differs from the effect that recent work has found for ICT, which seems to benefit high-skilled workers at the expense of middle-skilled workers (Autor 2014, Michaels et al. 2014).
In further results, we find that industrial robots increased total factor productivity and wages. At the same time, we find no significant effect of these robots on the labor share.
In summary, we find that industrial robots made significant contributions to labor productivity and aggregate growth, and also increased wages and total factor productivity.  While fears that robots destroy jobs at a large scale have not materialized, we find some evidence that robots reduced low- and middle-skilled workers’ employment.

    Posted by on Wednesday, March 18, 2015 at 10:02 AM in Economics, Technology | Permalink  Comments (17)


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