Robots and wage inequality: evidence from individuals in China

Abstract This study examines the impact of industrial robot adoption on wage inequality and employment outcomes in China, which has the world’s largest robotics stock and fastest-growing adoption rate. Using data from the China Family Panel Studies and the International Federation of Robotics, we constructed a county-level robot exposure index and employed the two-stage least squares approach to address endogeneity. Our results show that robot adoption exacerbates wage polarisation in China. When faced with rising robot exposure, medium-skilled workers experience annual wage losses, while the wages of low-skilled and high-skilled workers are not significantly affected. Besides wage impact, we find occupational upgrading among past low-skilled workers and provide suggestive evidence of reduced labour-force participation among medium- and high-skilled workers. This pattern points to asymmetric labour-market adjustment across skill groups faced with robot exposure. We also examine how the wage estimates vary with trade exposure and demographic ageing. The trade interactions are consistent with a smaller annual-wage penalty for medium-skilled workers where intermediate-import exposure is greater. In counties with older populations, robot exposure is linked to a greater increase in hourly wages and a larger decline in hours worked. These findings highlight the need for targeted policies to mitigate wage inequality and support vulnerable groups during technological transformation.