More Robots Lead to Hiring More People, Study Shows

There may be no reason to fear automation.

| May 05, 2020 10:17 AM EST

Created: May 05, 2020 10:17 AM EST

Many people fear the rise in automation may result in lower employment but that may not always be the case. According to new research, firms who were quick to add robots to their manufacturing also saw a rise in employees.

An additional dimension

“When you look at use of robots at the firm level, it is really interesting because there is an additional dimension,” said study co-author and MIT economist Daron Acemoglu. “We know firms are adopting robots in order to reduce their costs, so it is quite plausible that firms adopting robots early are going to expand at the expense of their competitors whose costs are not going down. And that’s exactly what we find.”

The study revealed that although a 20 percentage point increase in robot use from 2010 to 2015 led to a 3.2% decrease in employment, for firms adopting robots, employee hours actually increased by 10.9% and wages rose as well. The research took into account 55,390 French manufacturing firms, of which 598 added robots to their manufacturing during the period from 2010 to 2015.

A comprehensive view

“Our paper is unique in that we have an almost comprehensive [view] of robot adoption,” Acemoglu added.

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The study found that the firms that added robots became more productive and profitable reducing the need for labor. However, they also reported more growth and more market share, which meant they needed to add more workers.

On the other hand, the companies that did not add robots could not compete with the firms that did and therefore saw their employment drop 2.5 % for every 10 percentage point increase in robot adoption by their competitors.

These results seem to agree with other research that suggests that the rise of automation will create new jobs. In that case, we may not lose our jobs instead we will just have to adopt new skills.

The study will be published in the May issue of the American Economic Association: Papers and Proceedings.