Industrial robots in China are pushing people out of jobs, driving down wages

(ORDO NEWS) — The use of industrial robots in the workplace leads to a decrease in the number of jobs, a decrease in employment and wages, economic researchers say.

Workplace automation also increases family debt and reduces the number of children born to affected families, while increasing the time and money families invest in existing children.

In a paper titled “How Are Workers and Households Adapting to Robots? Evidence from China” distributed by the National Bureau of Economic Research, co-authors Osea Juntella (University of Pittsburgh), Yi Lu (Tsinghua University) and Tianyi Wang (University of Toronto) analyzed the impact of industrial robots on workers and their families.

They focused on data from China, as in 2014 Chinese President Xi Jingping called for a robot revolution to boost manufacturing, and China’s 2016-2020 five-year plan included billions of yuan to speed up factory automation.

They also sought to study the impact of robots on “emerging economies”, which have not been studied as often as “advanced economies”.

China has the largest number of industrial robots in the world (~943,200 units), but lags behind more developed countries on a per capita basis, the authors note.

South Korea, Singapore, Japan, Germany and Sweden have the most robots per 10,000 workers, followed by Hong Kong, the US, Taiwan and China, according to the International Federation of Robotics.

The researchers note that investing in robots could help China increase labor productivity amid rising labor costs, increased international competition and an aging population. However, automation is affecting the economic prospects of hundreds of millions of Chinese workers in manufacturing and other sectors.

Citing a 2016 paper, they claim that up to 77 percent of jobs in China are automated. They cite manufacturing company Foxconn as an example, noting that between 2012 and 2016, the iPhone maker replaced more than 400,000 jobs in China with robots as part of efforts to achieve 30 percent factory automation by 2020. We hope that metal machines will also not rebel.

After analyzing the results of the China Family Panel Studies for the period from 2010 to 2016, the authors say they found “a significant negative effect of the impact of robots on employment and wages.”

“We have shown that a 1 standard deviation increase in robot exposure decreases an individual’s likelihood of being employed by 6 percentage points (-7.5% of the mean), increases the likelihood of leaving the labor force by 1 percentage point (+10.5% on average). relative to the mean) and increases the likelihood of reporting unemployment by 5 percentage points (or 0.17 standard deviations),” the authors state in their paper.

They also found that exposure to robots reduces hourly income (-9%) but does not affect annual income, as those affected – mostly low-skilled, male, primary and older workers – tend to work longer hours (+14%) to compensate for a pay cut.

Or they go into debt. “While the impact of robots is negatively impacting wages and employment opportunities, we are recording an increase in borrowing (+10%), which allows families to maintain the same level of consumption and savings,” the authors note.

As robots proliferate, this encourages older workers to retire earlier, while younger workers are more likely to take technical or work-related training to maintain their value in the labor market.”

Looking at the effects of robot exposure on families, the researchers say they saw no evidence of an effect on spouse behavior. However, they found that “exposure to robots resulted in a slight decrease in the number of children (-1.2 percent)”.

Moreover, the impact of robots has increased the time families spend on educating their children (+10%) and investing in extracurricular and extracurricular activities for children (+24%).

If automation does not create jobs, the authors note, it can lead to inequality. Developing countries, in their opinion, should be especially careful to ensure that the increase in labor productivity through automation does not turn into economic injustice and social unrest.

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