Robots, reshoring, and the lot of low-skilled workers
Klaus Prettner () and
Holger Strulik ()
No 351, Center for European, Governance and Economic Development Research Discussion Papers from University of Goettingen, Department of Economics
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. Using a new measure of reshoring activity and data from the world input outputtable, we find evidence for a positive association between reshoring and the degree of automation. On average, within manufacturing sectors, an increase by one robot per 1000 workers is associated with a 3.5% increase of reshoring activity. We also provide evidence that reshoring is positively associated with wages and employment for high-skilled labor but not for low-skilled labor.
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)
New Economics Papers: this item is included in nep-lma, nep-pke and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:351
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