Capital-Labor Substitution and Economic Efficiency in the Context of Industry 4.0

Abstract

The aim of the paper is to provide an insight into the area of substitution of human labor by the capital of the manufacturing sector. First, the labor market in the Czech Republic is described and then an economic analysis of the process of replacing human labor with a robot is performed. This analysis will be reflected in the Stella Professional tool, which enables dynamic modeling of economic systems using visual diagrams. At the same time, this tool allows mathematical calculations and simulations that will be created fifteen years in advance. These simulations are used to calculate the economic return on investment in the robotization of production plants. Companies can enter their own input values in the created model and the tool calculates the payback period of the investment project and identifies the time frame when the investment is most appropriate to make.