How Does Industrial Robot Adoption Affect Labor Income in the Service Sector? Micro Evidence on Cross‐Sectoral Spillovers

ABSTRACT The widespread adoption of industrial robots in manufacturing is reshaping labor markets worldwide, yet its cross‐sectoral implications remain poorly understood. Using data from the China Labor‐force Dynamics Survey, this paper systematically examines how industrial robot adoption affects service‐sector labor income. The results show that the adoption of industrial robots generates significant positive cross‐sectoral spillovers and increases service‐sector labor income. Heterogeneity analysis indicates that the income gains are stronger in consumer services and high‐skill services, more pronounced in large cities, and larger for women and high‐skilled workers. Mechanism analysis further reveals that the service‐sector expansion effect and the labor reallocation effect are key channels through which industrial robot adoption affects service‐sector labor income. Further analysis suggests that a deeper division of labor in the service sector amplifies this positive income effect.