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Robots and Firm Investment

Author

Listed:
  • Efraim Benmelech
  • Michal Zator

Abstract

Automation technologies, and robots in particular, are thought to be massively displacing workers and transforming the future of work. We study firm investment in automation using cross-country data on robotization as well as administrative data from Germany with information on firm-level automation decisions. Our findings suggest that the impact of robots on firms has been limited. First, investment in robots is small and highly concentrated in a few industries, accounting for less than 0.30% of aggregate expenditures on equipment. Second, recent increases in robotization do not resemble the explosive growth observed for IT technologies in the past, and are driven mostly by catching-up of developing countries. Third, robot adoption by firms endogenously responds to labor scarcity, alleviating potential displacement of existing workers. Fourth, firms that invest in robots increase employment, while total employment effect in exposed industries and regions is negative, but modest in magnitude. We contrast robots with other digital technologies that are more widespread. Their importance in firms’ investment is significantly higher, and their link with labor markets, while sharing some similarities with robots, appears markedly different.

Suggested Citation

  • Efraim Benmelech & Michal Zator, 2022. "Robots and Firm Investment," NBER Working Papers 29676, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29676
    Note: CF EFG LS PR
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    Cited by:

    1. Liu, Lei & Li, Tianze & Phan, Quoc & Wu, Zhenyu & Zheng, Steven Xiaofan, 2024. "Automation exposure and operating performance," Finance Research Letters, Elsevier, vol. 65(C).
    2. Liu, Shasha & Wu, Yuhuan & Kong, Gaowen, 2024. "Politics and Robots," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Nicoletta Corrocher & Daniele Moschella & Jacopo Staccioli & Marco Vivarelli, 2024. "Innovation and the labor market: theory, evidence, and challenges," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 519-540.
    4. Qiu, Jiaping & Wan, Chi & Wang, Yan, 2024. "Labor-saving innovations and capital structure," Journal of Corporate Finance, Elsevier, vol. 84(C).
    5. Tania Babina & Alex X. He & Anastassia Fedyk & James Hodson, 2022. "Artificial Intelligence, Firm Growth, and Product Innovation," NBER Chapters, in: Economics of Artificial Intelligence, National Bureau of Economic Research, Inc.
    6. Davide Antonioli & Alberto Marzucchi & Francesco Rentocchini & Simone Vannuccini, 2022. "Robot Adoption and Innovation Activities (last revised: December 2023)," Munich Papers in Political Economy 21, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.
    7. Gan, Jiawu & Liu, Lihua & Qiao, Gang & Zhang, Qin, 2023. "The role of robot adoption in green innovation: Evidence from China," Economic Modelling, Elsevier, vol. 119(C).
    8. Antonioli, Davide & Marzucchi, Alberto & Rentocchini, Francesco & Vannuccini, Simone, 2024. "Robot adoption and product innovation," Research Policy, Elsevier, vol. 53(6).
    9. Dosi, G. & Pereira, M.C. & Roventini, A. & Virgillito, M.E., 2022. "Technological paradigms, labour creation and destruction in a multi-sector agent-based model," Research Policy, Elsevier, vol. 51(10).
    10. Grimm, Felix & Gathmann, Christina, 2022. "The Diffusion of Digital Technologies and its Consequences in the Labor Market," VfS Annual Conference 2022 (Basel): Big Data in Economics 264087, Verein für Socialpolitik / German Economic Association.
    11. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan, 2024. "The pandemic push: Digital technologies and workforce adjustments," Labour Economics, Elsevier, vol. 89(C).
    12. Babina, Tania & Fedyk, Anastassia & He, Alex & Hodson, James, 2024. "Artificial intelligence, firm growth, and product innovation," Journal of Financial Economics, Elsevier, vol. 151(C).
    13. Hidalgo, Camila & Micco, Alejandro, 2024. "Computerization, offshoring and trade: The effect on developing countries," World Development, Elsevier, vol. 180(C).
    14. Cui, Huijie & Liang, Shangkun & Xu, Canyu & Junli, Yu, 2024. "Robots and analyst forecast precision: Evidence from Chinese manufacturing," International Review of Financial Analysis, Elsevier, vol. 94(C).

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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