Robots and Firm Investment

Efraim Benmelech and Michal Zator

No 29676, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Automation technologies, and robots in particular, are thought to be massively displacing workers and transforming the future of work. We study firm investment in automation using cross-country data on robotization as well as administrative data from Germany with information on firm-level automation decisions. Our findings suggest that the impact of robots on firms has been limited. First, investment in robots is small and highly concentrated in a few industries, accounting for less than 0.30% of aggregate expenditures on equipment. Second, recent increases in robotization do not resemble the explosive growth observed for IT technologies in the past, and are driven mostly by catching-up of developing countries. Third, robot adoption by firms endogenously responds to labor scarcity, alleviating potential displacement of existing workers. Fourth, firms that invest in robots increase employment, while total employment effect in exposed industries and regions is negative, but modest in magnitude. We contrast robots with other digital technologies that are more widespread. Their importance in firms’ investment is significantly higher, and their link with labor markets, while sharing some similarities with robots, appears markedly different.

JEL-codes: E22 E24 E25 G31 J23 J24 J3 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-cwa, nep-eur, nep-lma, nep-mac and nep-tid
Note: CF EFG LS PR
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