Robots, reshoring, and the lot of low-skilled workers

Abstract

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Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

“…Heterogeneities and inequality not only affect the spread and the economic impact of epidemics, but there is also the reverse channel of epidemics hitting people with lower incomes particularly hard. This is because (i) working from home as a coping mechanism is often not feasible for many low-income jobs; (ii) poor access to health care and insurance schemes and reliance on public transport increase susceptibility to the diseases and the potential costs when falling ill; (iii) the increased incentive to invest in automation in the course of epidemics predominantly lead to a replacement of routine and low-wage jobs (Prettner and Bloom, 2020); and iv) while efforts to re-shore economic activity in the face of supply chain disruptions and travel restrictions (e.g., in the production of medical supplies) might be seen to present an opportunity for domestic workers, re-shoring tends to be associated with more automated production, such that low-income persons would not benefit (Krenz et al, 2020) and global inequality could rise. A particular challenge for policymakers is therefore to reduce the inequality-increasing tendencies of epidemics when designing policies to cope with epidemic-induced economic downturns.…”

U.S. Robots and Their Impacts in the Tropics: Evidence from Colombian Labor Markets

“…GVCs are, instead, becoming more knowledge-intensive and dependent on highly qualified workers. Krenz et al (2018), analyze 43 countries and nine manufacturing sectors, and provide evidence that an increase by one robot per thousand workers is associated with a 3.5% increase of reshoring activity. Moreover, the authors find that the adoption of robots leads to reshoring benefitting high-skilled workers, but not low-skilled ones, from advanced economies.…”

Essays on Technological Change and Trade in Development Economics

“…Carbonero et al (2018) document that advanced economies decrease their offshoring activities, which has a negative employment effect for emerging economies. Similarly, Krenz et al (2021) find that robot adoption leads to reshoring, benefiting high-skilled workers in advanced economies. Using data on LLMs in the USA, Bonfiglioli et al (2021) find that automation has a weaker labor displacement effect in commuting zones that are more exposed to offshoring.…”

“…However, up-to-date, research on the effects of automation has focused primarily on industrialized economies. Even though developing and emerging economies themselves have adopted relatively few robots, robots in other countries may already indirectly affect their labor markets (Krenz et al, 2021;Faber, 2020). The paper first develops a theory of how robot adoption in domestic and foreign industries may have differential effects on local labor market employment.…”

“…For example, quite literally, Boehm et al (2019) show that an earthquake in Japan disrupted production of affiliate firms in the USA, as the supply of inputs fell substantially. Also new technologies, which for instance alter production systems, may induce transformations beyond the location of their operation (Graetz and Michaels, 2018;Krenz et al, 2021), and those which introduce new applications may create new opportunities beyond their primary field of use (Aker and Mbiti, 2010;Suri, 2017). Figure I.1 illustrates the outline of the thesis.…”