Robot adoption and employment adjustment: Firm-level evidence from China

Abstract

This paper investigates the impact of robot adoption on employment adjustment at the firm level in China. By employing an instrumental variable that exploits the source of variation in robot adoption across firms, our analysis reveals that the utilization of industrial robots leads to an increase in employment within firms, particularly with regard to highly educated and skilled personnel. Furthermore, an exploration of the underlying mechanisms demonstrates that this positive employment effect is primarily attributed to the productivity effect of robot adoption, resulting in increased productivity and heightened labor demand. However, there is limited empirical support for the negative displacement effect wherein robots replace workers. Additionally, our investigation uncovers evidence of technology-driven intra-industry labor reallocation to robot-adopting firms from their non-adopting counterparts.