Extract from an article by Wolfgang Dauth, Sebastian Findeisen, Jens Südekum and Nicole Woessner
Recent research has shown that industrial robots have caused severe job and earnings losses in the US. This column explores the impact of robots on the labour market in Germany, which has many more robots than the US and a much larger manufacturing employment share. Robots have had no aggregate effect on German employment, and robot exposure is found to actually increase the chances of workers staying with their original employer. This effect seems to be largely down to efforts of work councils and labour unions, but is also the result of fewer young workers entering manufacturing careers.
The fear of an imminent wave of technological unemployment is again one of the dominant economic memes of our time. The popular narrative often goes as follows – as software and artificial intelligence advance, production processes (especially in manufacturing) become increasingly automated. Workers can be replaced by new and smarter machines – industrial robots, in particular – which are capable of performing the tasks formerly carried out by humans, faster and more efficiently. The robots will therefore make millions of workers redundant, especially those with low and medium qualifications, and reshape society in a fundamental way.
There have been dramatic estimates of how many occupations are at risk of being automated, given the type of work they usually conduct (e.g. Frey and Osborne 2017). But until very recently, there has been little systematic analysis about the general equilibrium impact of robots and other new technologies. Acemoglu and Restrepo (2016, 2017) show that this equilibrium impact is, in fact, ambiguous theoretically. Robots directly substitute workers when holding output and prices constant, but the resulting cost reductions also increase product and labour demand. Moreover, workers can be soaked up by different industries, and specialise in new and complementary tasks.
Acemoglu and Restrepo develop an estimation approach from their theory, and apply it to local labour markets in the US (1993-2014). The empirical picture that emerges seems to confirm some of the darkest concerns. Specifically, they find that one additional robot reduces total employment by around three to six jobs. It also reduces average equilibrium wages for almost all groups in the labour market. So, displacement effects caused by robots seem to be widely dominant in the US..(continues)
SOURCE: Wolfgang Dauth, Sebastian Findeisen, Jens Südekum and Nicole Woessner, “The rise of robots in the German labour market”, VOX: CEPRs Policy Portal, 19 September 2017
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