Robots, Tasks, and Trade

This paper examines the effects of robotization on trade patterns, wages and welfare. It developsa Ricardian model with two-stage production and trade in intermediate and final goods in which robots can take over some tasks previously performed by humans in a subset of industries. An increase in robot adoption in the North reduces the cost of production and thereby impacts trade in final and intermediate goods with the South. The empirical analysis uses ordinary least squaresand instrumental-variable regressions exploiting variation in exposure to robots across countriesand sectors. Both reveal that greater robot intensity in own production leads to: (i) a rise inimports sourced from less developed countries in the same industry; and (ii) an even stronger increase in exports to those countries. Counterfactual simulations indicate that Northern roboti-zation raises domestic welfare, but initially depresses wages. However, this adverse effect is likely to be reversed by further reductions in robot prices. Northern robotization may lead to higherwages and welfare in the South.