Robots and Nonparticipation in the US: Where Have All the Displaced Workers Gone?

Abstract

This paper analyzes the impact of one of the leading automation technologies of the last decades, industrial robots, on the declining labor force participation in the US. Exploiting exogenous variation in the adoption of robots across local labor markets and over time, I find that, on average, one additional robot drives two workers out of the labor force. Despite the adverse impact of robots, there is no evidence that displaced workers are migrating away from exposed labor markets or that labor force dropouts have been compensated by the labor force participation of a family member. Instead, I find that robot adoption leads to rising enrollment in post-secondary education institutions among young individuals, early retirement of older workers and a considerable fraction of middle-aged workers enrolling in disability insurance.