Robots, Reshoring, and the Lot of Low-Skilled Workers

Astrid Krenz, Klaus Prettner and Holger Strulik

No 443, GLO Discussion Paper Series from Global Labor Organization (GLO)

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, we 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. Using robots in countries with similar sectoral structure as an instrument, we find that an increase by one robot per 1000 workers causes a 2.5% increase of reshoring activity. We also provide the first cross-country evidence that reshoring is positively associated with wages and employment for high-skilled labor but not for low-skilled labor and that tariffs increase the degree of reshoring.

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: 2020
New Economics Papers: this item is included in nep-lma and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Robots, reshoring, and the lot of low-skilled workers (2021)
Working Paper: Robots, Reshoring, and the Lot of Low-Skilled Workers (2019)
Working Paper: Robots, reshoring, and the lot of low-skilled workers (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:443

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