Fact of the Week: Doubling the Intensity of Investment in Robots Increases an Industry’s Labor Productivity by 6.9 Percent, on Average

Source: Andre Jungmittag and Annarosa Pesole, “The impact of robots on labour productivity,” 2019, JRC Working Papers Series on Labour, Education and Technology 2019/08, European Commission.

Commentary: Automation boosts labor productivity, which is key to long-run economic growth. A new study examines the impact of automation on labor productivity in nine manufacturing industries across 12 European countries from 1995 to 2005, comparing the number of robots in use in an industry with the amount it invests in non-ICT capital. The study finds that the industries have had an average of 0.16 robots per €1 million in non-ICT capital investment over that period, and that doubling the proportion of robots increases an industry’s labor productivity by 6.9 percent. The transportation manufacturing industry shows by far the largest effect—81 percent larger than the next industry, rubber and plastics manufacturing—while chemicals manufacturing experiences the smallest productivity benefit from increased automation.