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New research blames robots for slashing U.S. wages and worsening pay inequality.

30.03.2017

Industrial robots have had a "large" and negative effect on U.S. employment and wages in local labor markets, according to new research by Massachusetts Institute of Technology's Daron Acemoglu and Boston University's Pascual Restrepo.

One additional robot per thousand workers reduces the employment-to-population ratio by 0.18 percentage points to 0.34 percentage points and slashes wages by 0.25% to 0.5%, based on their analysis. To put that in context, the U.S. saw an increase of about one new industrial robot for every thousand workers between 1993 and 2007, based on the study.

"The employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education," the authors write. "Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups." Worth noting: the authors estimate that robots may have increased the wage gap between the top 90th and bottom 10% by as much as 1 percentage point between 1990 and 2007. There's also room for much broader robot adoption, which would make all of these effects much bigger.

The unemployment rate has more than halved since its 2009 peak, yet it fails to account for some potential workers: it doesn't capture all of the people who are underemployed or who aren't actively applying to jobs. To examine what's happening in the broader population, Federal Reserve Bank of San Francisco Senior Economist Marianna Kudlyak revisits an index of non-employment in a new analysis.

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