Robots and employment in emerging countries

Delgado wonders

In the first two decades of the 21st century, the effects of automation on the labor market have received a great deal of attention from both economic research and policy makers. Concern about the potential negative effects on employment is especially relevant in emerging countries, where in recent years there has been a rapid acceleration in the adoption of robots and a growing participation in global value chains, with the consequent increase in exposure to foreign competition. In a recent study with Luis Díaz Pavez we have estimated the effect of the adoption of robots in production processes on employment and the share of labor income in the total income of ten emerging countries —including the so-called BRIICs (Brazil, Russia, India,Indonesia and China), Bulgaria, Poland, Mexico, Romania and Turkey—.

More information

• Artificial intelligence and robotics will widen the gap between rich countries and developing economies

The first hypothesis is that automation in developed countries may pose a threat to employment in emerging countries if accompanied by a reduction in production relocation (

in English) to these countries or relocation or return to home of the same (

).

The second hypothesis is that certain workers could be replaced by robots with the consequent reduction in the share of labor income in GDP.

The main results of the study show that the adoption of robots in industrialized countries, but not in emerging ones, has reduced employment in the latter, while the contribution of earned income to GDP has not been affected. When analyzing the effects by sector, it is observed that the negative effect of the adoption of robots abroad on employment has occurred mainly in agriculture and in the industrial machinery sector, the former having been driven by a reduction in offshoring and affecting more than 50% of the jobs in the emerging countries considered. Although the cause is not so obvious in the case of industrial machinery,One possible explanation is that the adoption of robots in developed countries can generate high labor cost savings and potentially replace large numbers of workers in emerging countries by encouraging a return to local production. Furthermore, the fact that agriculture is the sector with the highest share of employment in the emerging countries considered makes it the main responsible for the overall negative effect of exposure to foreign robots on employment.The fact that agriculture is the sector with the highest share of employment in the emerging countries considered makes it the main responsible for the overall negative effect of exposure to foreign robots on employment.The fact that agriculture is the sector with the highest share of employment in the emerging countries considered makes it the main responsible for the overall negative effect of exposure to foreign robots on employment.

On the other hand, the results of the work show positive effects of the adoption of robots abroad on employment in the sectors of rubber, plastic and minerals, electronics and pharmaceutical products. These findings would validate the complementarity effects between robots and skilled workers that have been derived in the theoretical models on the subject developed by Daron Acemoglu.

There are three economic policy implications for emerging countries that emerge from this study. First, automation trends in agriculture and the industrial machinery sector in developed countries can be identified as destabilizing factors in the labor market of emerging countries, and serve as crucial information to policy makers when designing. labor, distributive and sectoral policies. Second, emerging countries should invest more in human capital and adult training policies so that the workers of the future are more complementary to robots, thus protecting them from job losses and increasing their productivity. Likewise, and adjusting to the context,governments of emerging countries could apply more flexible fiscal policies that favor foreign investment in sectors with high automation in developed countries, to lower their production costs and increase incentives for offshoring production, as well as incentivize investments in compatible technologies with human work, which therefore generate quality jobs.

Finally, it should be noted that more granular investigations of the effect of automation on the labor market based on data from companies in emerging countries are needed.

Another issue that deserves special attention is the decomposition of the effects of the adoption of robots on employment and wages according to the level of qualification of workers to know how it affects specific workers.

Inmaculada Martínez-Zarzoso

is a professor at the universities of Göttingen and Jaume I.