Robotization and employment dynamics in German manufacturing value chains

Abstract

The use of industrial robotics is increasingly integrated within different production processes in manufacturing. This raises concerns about the potential impacts of automation on labor-intensive production tasks in the country of installation, but also in other economies along global value chains (GVCs). We analyze the relationship between the use of robots in Germany and the employment content of foreign exports serving German final demand for 14 manufacturing industries over the period 2005 to 2015. Our results indicate a positive relationship between robotization in Germany and employment in its upstream GVC trade partners in the long run. When comparing OECD and non-OECD countries, the positive association is more pronounced in the non-OECD sample, especially in low-tech industries. The positive association is stronger for industry-country combinations that have a high share of intermediates exports to Germany. Our findings indicate a positive productivity effect resulting from automation.