Economics at your fingertips  

Robots, reshoring, and the lot of low-skilled workers

Astrid Krenz, Klaus Prettner and Holger Strulik

European Economic Review, 2021, vol. 136, issue C

Abstract: We propose a theoretical framework to analyze the offshoring and reshoring decisions of firms in the age of automation. Our theory suggests that increasing productivity in automation leads to a relocation of previously offshored production back to the home economy but without improving low-skilled wages and without creating jobs for low-skilled workers. Since it leads also to increasing wages for high-skilled workers, automation-induced reshoring is associated with an increasing skill premium and increasing inequality. We develop a measure for reshoring activity at the macro-level and, using data from the world input output table, provide evidence for automation-driven reshoring. On average, within manufacturing sectors, an increase by one robot per 1000 workers is associated with a 3.5% increase of reshoring activity. We corroborate the results using an IV regression framework. We also provide the first cross-country evidence that reshoring is positively associated with wages and employment for workers in professional occupations but not for workers in elementary-routine occupations and that tariffs increase the reshoring intensity.

Keywords: Automation; Reshoring; Employment; Wages; Inequality; Tariffs (search for similar items in EconPapers)
JEL-codes: F13 F62 J31 O33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Robots, Reshoring, and the Lot of Low-Skilled Workers (2020) Downloads
Working Paper: Robots, Reshoring, and the Lot of Low-Skilled Workers (2019) Downloads
Working Paper: Robots, reshoring, and the lot of low-skilled workers (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.euroecorev.2021.103744

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-09-20
Handle: RePEc:eee:eecrev:v:136:y:2021:i:c:s0014292121000970