Adopting robots helps some firms increase employment, finds study

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Published: May 11, 2020 10:28 AM

The research team analysed over 55,000 French firms over the period ranging from 2010-2015. Of these firms, 598 purchased robots.

Economics, Social sciences, Technology and society, Artificial intelligence, Jobs, Europe, Business and management, impact of robots, robots and employment, robots studyThe results of the French study collate with a recent study examining the US industry.

Robots and employment: A study co-authored by MIT economist Daron Acemoglu has found that while adding robots to the manufacturing process reduces over 3 jobs per robot, a firm which adopts robots into their system at a fast pace add more people onto their payroll, while those firms which are slow to adapt to this change have to cut employment. The study examined the French manufacturing process and the inclusion of robots to the process in the recent decades.

The research team analysed over 55,000 French firms over the period ranging from 2010-2015. Of these firms, 598 purchased robots, and it was examined that while these firms accounted for just around 1%, they also held 20% share of the manufacturing production in that period.

In a statement released by MIT, Acemoglu explains that the use of robots at the level of firms has an additional dimension. He said that it is known that adoption of robots is being done to reduce the costs, and so, these firms including robots are expanding their business at the expense of their competitors who are not able to reduce their costs.

The study, called “Competing with Robots: Firm-level Evidence from France”, found that the companies which employed robots to their processes became more productive and profitable and the addition led to a decline of 4-6% in the share of their income which was going towards their workers. However, since their company expanded and started growing due to the investment in technology, these firms ended up hiring more workers in the overall scenario.

On the contrary, the firms which were slow in adopting the robots, did not see any decline in the part of their income going towards their workers. Moreover, as their competitors adopted robots, these firms saw a decline in employment because they were losing out their ground to the competitors.

A recent related but separate study, also co-authored by Acemoglu, analysed the effect of robots on the employment in the US industry and found that, for every robot employed in the industry, there is a loss of 3.3 jobs. The results of the French study collate with the US one too, Acemoglu said, adding that, in the French study one might initially think the results are opposite to the US study. One might first be of the view that firms who adopt robots are expanding employment. However, he said, the expansion in employment is only because these firms are growing at the expense of their competitors.

When the indirect impact on the competitors is added to the equation, he said, the overall result turns out to be negative and along the lines of the US study, where robot-adoption translates to destruction of jobs.

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