Air Pollution and the Adoption of Industrial Robots in Firms

ABSTRACT We document that air pollution can explain the adoption of industrial robots in firms. By leveraging the spatial discontinuity of air pollution caused by the Huai River policy along the Huai River and Qinling Mountains, the research applies a regression discontinuity design to accurately identify the positive impact of air pollution on the adoption of industrial robots in firms. Results obtained from various tests reveal that the relationship between the two is casual. From a mechanistic perspective, this paper posits that air pollution has an adverse effect on labor allocation. However, it also increases labor costs and environmental regulation intensity, thereby inducing firms to adopt more industrial robots. Furthermore, this study finds that industries vulnerable to light pollution, low energy consumption, and labor intensity exhibit a more pronounced positive relationship between air pollution and industrial robot adoption.