The effects of automation on workers’ wages

This study examines the impact of industrial robots on relative sectoral wages across 20 European countries from 2010 to 2018. It finds a net positive effect of robot adoption on median sectoral wages relative to the country median, with the strongest effects observed among routine manual and nonroutine manual occupations. Importantly, these effects vary across regions – workers in Eastern European countries benefit twice as much from automation as their Western European counterparts. The difference stems from the nature of automation investments – in Eastern Europe, automation is linked to foreign direct investments and sectoral expansion, whereas in Western Europe, higher relative sectoral wages are associated with a decreasing share of routine workers. Results are robust to excluding different capital measures, a battery of fixed effects, a change of instruments, and alternative measures of wages and task group allocations.