THE EFFECT OF ROBOT ADOPTION ON FIRM EMPLOYMENT: EVIDENCE FROM CHINA

The adoption of industrial robots has gradually become popular around the world. This paper investigates the impact of robot adoption on firm employment using Chinese firm-level Employer-Employee Survey data. Instrumental variables are used to address the potential endogeneity of robot adoption. The results show that robot adoption increases firm total employment, both low-skilled employment and high-skilled employment. The effects are more substantial among the firms in the low-tech industries and small- and micro-sized firms. Mechanism analysis shows that the firms’ production efficiency and scale are the possible channels through which robot adoption increases firm employment. Our analysis implies that firms adopting robots will increase employment, which has great implications for policymakers and enterprises to make decisions on robot adoption in developing countries.