The Employment Consequences of Robots: Firm-Level Evidence

By Jay Dixon, Bryan Hong, Lynn Wu. 2020

323 citations recorded by the source corpus.

As a new general-purpose technology, robots have the potential to radically transform employment and organizations. In contrast to prior studies that predict dramatic employment declines, we find that investments in robotics are associated with increases in total firm employment, but decreases in the total number of managers. Similarly, we find that robots are associated with an increase in the span of control for supervisors remaining within the organization. We also provide evidence that robot adoption is not motivated by the desire to reduce labor costs, but is instead related to improving product and service quality. Our findings are consistent with the notion that robots reduce variance in production processes, diminishing the need for managers to monitor worker activities to ensure production quality. As additional evidence, we also find robot investments predict improved performance measurement and increased adoption of incentive pay based on individual employee performance. With respect to changes in skill composition within the organization, robots predict decreases in employment for middle-skilled workers, but increases in employment for low- and high-skilled workers. We also find robots not only predict changes in employment, but also corresponding adaptations in organizational structure. Robot investments are associated with both centralization and decentralization of decision-making authority depending upon the task, but decision rights in either case are reassigned away from the managerial level of the hierarchy. Overall, our results suggest that robots have distinct and profound effects on employment and organizations that require fundamental changes in firm practices and organizational design.

Subfields: Economics and Econometrics, Sociology and Political Science, AI Ethics, Fairness & Society, Economics & Operations Research

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1. Pamela Mishkin
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4. Daniel Rock

In Sociology and Political Science

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In AI Ethics, Fairness & Society

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Citations in the corpus

• GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models (2023, background): “…technologies’ full potential requires extensive co-invention (Bresnahan and Trajtenberg, 1995; Bresnahan et al., 1996, 2002; Lipsey et al., 2005; Dixon et al., 2021), a costly and time-consuming process involving the discovery of new business procedures (David, 1990; Bresnahan, 1999; Frey,…”
• Advanced Technologies Adoption and Use by U.S. Firms: Evidence from the Annual Business Survey (2020, unknown): “For instance, Acemoglu and Restrepo (2020), Graetz and Michaels (2018), Dinlersoz and Wolf (2018) and Dixon et al. (2020) find that the diffusion of robots has had important labor market and productivity consequences across regions and nations.”