From Immigrants to Robots: The Changing Locus of Substitutes for Workers
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According to @GeorgeBorjas @nberpubs, the influx of industrial robots has been modest but is poised to surpass the impact of additional immigration on labor markets.
A new NBER paper from Harvard’s George Borjas and Richard Freeman suggests the robot supply shock has been modest but is likely to exceed the impact of additional immigration going forward.
"....The influx of industrial robots into an industry over time is associated with a substantial fall in employment and earnings that is concentrated on lower educated workers and on those in occupations that experts view as “automatable”.The entry of an additional robot reduces employment and wages by more than the entry of an additional immigrant, suggesting that one industrial robot is comparable to 2 to 3 human workers and upwards of 3 to 4 in particular groups.While the number of robots per worker is too modest to be a major determinant of wages and employment patterns in the period covered by our study, our estimates suggest that continued exponential growth of robots could disrupt job markets in the next decade or so and thus merits monitoring and analysis by labor analysts.....Treating the deployment of industrial robots as a supply shock in a demand supply model that includes the influx of immigrants as a separate measure of changes in supply offers a unique perspective on the development of technological substitutes for labor. It highlights the critical importance of the displacement parameter that connects the numbers of robots to the shift in supply of equivalent workers and provides a natural comparison metric in terms of the shift in supply due to immigrants.In our calculations robots had a negative impact on wages and employment overall and in most groups, with the negative impact of robots substantially larger than the negative impacts of immigrants on wages and employment.Taking the table 4 and 5 IV calculations for all workers as the best estimate of the overall impacts, the displacement effects of robots are on the order of 2-3 times the effects of immigrants. Honing down to narrower groups suggests that the impacts are larger for less educated workers, for female workers, and for workers in occupations viewed as more automatable, ranging upward to robot displacement effects of 3-4 time.....Despite the media uproar about robots, the robot supply shock has been too modest through the mid-2010s to disrupt the labor market. On the other side, the evidence that the increased supply of industrial robots has depressed employment and wages in affected industries, with a robot adding the equivalent of 2 to 3 workers to labor supply on average and 3-4 workers in particular groups, suggests that it would be foolhardy to dismiss the concerns about the future of work.Reasonably large supply shock effects of technology and exponential growth of robots and related technologies have the potential to shake up the world of work in the foreseeable future.....Increased use of robots has roused concern about how robots and other new technologies change the world of work. Using numbers of robots shipped to primarily manufacturing industries as asupply shock to an industry labor market, we estimate that an additional robot reduces employment and wages in an industry by roughly as much as an additional 2 to 3 workers and by 3 to 4 workers in particular groups, which far exceed estimated effects of an additional immigrant on employment and wages. While the growth of robots in the 1996-2016 period of our data was too modest to be a major determinant of wages and employment, the estimated coefficients suggest that continued exponential growth of robots could disrupt job markets in the foreseeable future and thus merit attention from labor analysts....."
George Borjas and Richard B. Freeman, "From Immigrants to Robots: The Changing Locus of Substitutes for Workers," National Bureau of Economic Research, https://www.nber.org/papers/w25438