Study: Robots Actually Hurt Wages, Stoke Pay Inequality

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Eric Lieberman Managing Editor
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Industrial robots had a significant impact on U.S. employment and wages for many local labor markets between 1990 and 2007, according to new research.

“Employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education,” reads the study from the National Bureau of Economic Research (NBER). “Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups.”

Researchers, specifically Daron Acemoglu, from the Massachusetts Institute of Technology, and Pascual Restrepo, from Boston University, said they were also surprised that there was no positive effect on workers with more than a college degree.

Ryan Hagemann, director of technology policy at the think tank, the Niskanen Center, said he finds this relatively surprising as well, while adding that the analysis doesn’t appear to factor in all of the potential effects of advanced technology.

“We’re more likely to see humans working with and not competing against robots in many of the industry jobs imperiled by automation,” Hagemman explained to The Daily Caller News Foundation. “Because the authors’ model treats the labor market as one of competition between human labor and automated labor, it doesn’t seem to account for potential productivity gains through cooperation between the two.”

Others, like Hagemann, argue the tangible and intangible benefits of automation, robotics, and advanced technology in general, may not be as easily understood, or overt.

“The endless search for new and better ways of doing things drives human learning and, ultimately, prosperity in every sense–economic, social, and cultural,” Adam Thierer, senior research fellow at the Mercatus Center, wrote in his book “Permissionless Innovation.” “The pessimistic critics of technological progress and permissionless innovation have many laments, but they typically fail to consult the historical record to determine how much better off we are than our ancestors.”

The NBER finds that one additional robot per thousand workers reduces the aggregate employment-to-population ratio by 0.18 to 0.34 percentage points, and lowers wages by 0.25 to 0.5 percent. The variation in reduction depends on whether the area measured includes “heavily-robotized manufacturing.” (RELATED: Amazon Looking To Remove Human Workers From Grocery Stores, Says Report)

The researchers conclude that their findings are a somewhat significant “first step in a comprehensive evaluation” of robots’ effects on the labor market.

But they also add a number of caveats to their studies, including the fact that since “there are relatively few robots in the U.S. economy, the number of jobs lost due to robots has been limited so far.”

“Missing from our study is any technological response to the changes in factor prices resulting from the introduction of robots (e.g., the creation of new labor-intensive tasks as in Acemoglu and Restrepo, 2016),” the study’s conclusion reads. “Nonetheless … we believe as well that the negative effects we estimate are both interesting and perhaps somewhat surprising, especially because they indicate a very limited set of offsetting employment increases in other industries and occupations.”

The researchers say their studies could demonstrate future implications of the spread of robots, since the technology may continue to expand, perhaps at an exponential rate.

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