012. April 2022

Some technology experts have predicted that automation will lead to a jobless future, while other observers are more sceptical about such scenarios.

The fear that the large-scale introduction of robots will eliminate a significant number of jobs is a fact of life, but how many jobs will robots actually replace?

Some technology experts have predicted that automation will lead to a jobless future, while other observers are more sceptical about such scenarios.

According to the study “Robots and Jobs: Evidence from U.S. Labor Markets” by MIT economist Daron Acemoglu and Pascual Restrepo PhD ’16, an assistant professor of economics at Boston University, the impact of robots varies widely by industry and region and may play a notable role in exacerbating income inequality, while also highlighting a real impact, albeit below some assumptions. “We find quite large negative employment effects,” says MIT economist Daron Acemoglu, although he notes that the trend’s impact may be overstated.

In commuting zones where robots were added to the workforce, each robot replaces about 6.6 local jobs.

Between 1990 and 2007, according to the study, the addition of one additional robot per 1,000 workers reduced the national employment-to-population ratio by about 0.2 per cent, with some areas of the United States being affected much more than others. This means that each additional robot in manufacturing replaced about 3.3 workers nationally, on average. That increased use of robots in the workplace also reduced wages by about 0.4 per cent over the same time. “We find negative wage effects, that workers are losing out in terms of real wages in the areas most affected because robots are pretty good at competing against them,” says Acemoglu.

Acemoglu and Restrepo used data on 19 industries compiled by the International Federation of Robotics (IFR), a Frankfurt-based industry group that keeps detailed statistics on robot deployment worldwide. The academics combined that with US-based data on population, employment, business and wages from the US Census Bureau, the Bureau of Economic Analysis and the Bureau of Labor Statistics, among other sources. In addition, it compared robot deployment in the US with that of other countries, finding that it lags behind that of Europe. From 1993 to 2007, US companies introduced almost exactly one new robot for every 1,000 workers; in Europe, companies introduced 1.6 new robots for every 1,000 workers.

“Although the US is a very technologically advanced economy, in terms of production and use of industrial robots and innovation, it lags behind many other advanced economies,” says Acemoglu. In the US, four manufacturing industries account for 70 per cent of robots: automakers (38 per cent), electronics (15 per cent), chemicals and plastics (10 per cent) and metal fabricators (7 per cent).

According to the researchers, in commuting zones where robots were added to the workforce, each robot replaces about 6.6 jobs locally. However, in a subtle twist, the addition of robots in manufacturing benefits people in other industries and other areas of the country by reducing the cost of goods, among other things. These national economic benefits are why the researchers calculated that adding a robot replaces 3.3 jobs for the country.

The issue of inequality

In conducting the study, Acemoglu and Restrepo went to great lengths to see whether employment trends in areas with heavy robot traffic might have been caused by other factors, such as trade policy, but they found no complicated empirical effects.

However, the study suggests that robots have a direct influence on income inequality. The manufacturing jobs they replace come from parts of the labour force that do not have many other good employment options; as a result, there is a direct connection between automation in industries that use robots and declining worker incomes.

When robots are added to manufacturing plants, “The burden falls on low- and middle-skilled workers. That’s really an important part of our overall research [on robots]. Automation is actually a much larger part of the technological factors that have contributed to the rise in inequality over the last 30 years.”

So, while claims about machines completely eliminating human labour may be exaggerated, Acemoglu and Restrepo’s research shows that the robot effect is very real in manufacturing, with important social implications. “It certainly won’t give any support to those who think robots will take all our jobs,” says Acemoglu. “But it does imply that automation is a real force to be dealt with.”