Effect of industrial robot use on China’s labor market: Evidence from manufacturing industry segmentation

Abstract

This paper empirically investigates the impact of industrial robot use on China’s labor market using data from 13 segments of manufacturing industry between 2006 and 2016. According to the findings, the use of industrial robots has a displacement effect on labor demand in manufacturing industry. The specific performance is that for every 1% increase in industrial robot stock, labor demand falls by 1.8%. After endogenous processing and a robustness test, this conclusion remains valid. This paper also discusses the effects of industrial robots across industries and genders. According to the results, industrial robot applications have a more pronounced displacement effect in low-skilled manufacturing than in high-skilled manufacturing. In comparison to female workers, industrial robot applications are more likely to decrease the demand for male workers. Moreover, this paper indicates that the displacement effect is significantly influenced by labor costs. Finally, we make appropriate policy recommendations for the labor market’s employment stability based on the findings.

Keywords

• industrial robot
• labor demand
• displacement effect
• manufacturing