No mass unemployent

Over the past couple of years there have been several firm-level studies on the effects of robot adoption in industrial settings. These papers all find that firms that adopt robots see an increase in employment. For example, a recent paper by Dixon, Hong, and Wu (2021) uses data on robot imports to identify Canadian firms that adopt robots.[1] They then compare employment, behavior, and performance between robot-adopting and non-adopting firms. They find that the robot-adopting firms experience a subsequent increase in employment and that the employment increase is predominantly from low-skill workers. As another example, Acemoglu, Lelarge, and Restrepo (2020) find that, among French manufacturing firms, those firms that adopted robots add jobs.[2] A similar finding is in a paper by Koch, Manulov, and Smolka (2019), who use firm level data from Spain.[3] These studies also find that the firms that adopt robots see an increase in performance (measured as an increase in firm-level total factor productivity or revenue). Interestingly, the studies find that the non-adopting firms in the same industry as the robot adopting firms see decreases in employment. This may be due to reallocation from slower-growing, more poorly-performing firms to faster-growing, better-performing firms. In some cases, the decreases in employment at the non-adopting firms more than outweigh the employment gains at the robot-adopting firms, causing a location- or industry-wide fall in employment (as shown for example in Acemoglu and Restrepo (2020)).[4]

There have also been papers on robot adoption in service settings. A paper studying the effects of robots on workers in Japanese nursing homes by Eggleston, Lee, and Iizuka (2021) finds that robots complement human labor and reduce labor turnover.[5] The physically demanding nature of work in nursing homes can often lead to high turnover, so robots in these settings are intentionally designed to assist with the most physically demanding tasks such as lifting patients out of beds. The paper also highlights an interesting feature of the Japanese setting: that many Japanese prefectures provide subsidies for nursing homes that adopt robots. If indeed robots complement human labor, then subsidies make sense and may help spur adoption of robots in these settings.

The evidence from this academic literature has two implications for the idea of a robot tax. First, there is no evidence that robots are directly substituting for human labor—indeed, robots may actually be complementing labor, resulting in increases in employment. Taxing firms that are adopting robots may then have the perverse effect of slowing employment growth. Second, while robots may in part be responsible for some labor reallocation within an industry, the bigger question is what to do about the non-robot adopting firms, since these are the firms experiencing employment decreases. Should these firms be allowed to shrink, perhaps ultimately going out of business, since they are less productive to begin with? Should there be robot subsidies, so that more firms are able to adopt robots, thereby presumably taking part in employment growth? Also, given the positive performance benefits for firms that adopt robots, why aren’t more firms adopting? Potential reasons could include lack of knowledge about the benefits that robots provide, lack of capital to invest in robots, or lack of skilled human capital at the firm or in the local labor market for adopting firms to hire, among other reasons. These are important questions for researchers and policymakers to study.