Fact of the Week: Robot Adoption Among Brazilian Firms Did Not Result in Significant Job Losses
Source: Gustavo de Souza and Haishi Li, “Robots, Tools, and Jobs: Evidence from Brazilian Labor Markets,” Working Paper Series, Federal Reserve Bank of Chicago, no. WP 2023-42 (January 2024).
Commentary: A revised working paper from this month by Gustavo de Souza and Haishi Li analyzed the effect that robot and tool adoption have on Brazilian workers. Past research on automation focused only on the employment effects of labor-saving robots. By contrast, this study included data on labor-complementing tools, which includes both hand tools and power tools. The study used data between 1997 and 2019 on Brazilian industries and regions and on imports of over 500 types of machines. The authors separated the data on machine imports into categories of robots and tools using a method of text referencing to identify which category a machine falls under.
The results of the study paint a more nuanced picture of the effects that robots have on workers. Overall, the authors found that a 1 percent increase in robot adoption led to a decrease in employment of about 0.4 percent. At the same time, a 1 percent increase in tool adoption increased employment by about 0.5 percent. This suggests that, overall, tool adoption mitigates the employment effects of robot adoption. To the extent that there were job or earnings losses from robots, they seemed to be concentrated only among high school dropouts. There were no statistically significant effects on employment or earnings for workers with at least a high school diploma.
The authors then analyzed how the fall in import prices for robots and tools between 1997 and 2014 would have affected employment. Specifically, the import prices for robots and for tools fell by about 38.8 percent and 45.9 percent, respectively, over that period. This has led to firms adopting both at the same time. While the fall in the price of robots over that period was associated with a 0.2 percent decrease in overall employment, the fall in tool prices over that same period was associated with a 0.5 percent increase in employment. When looking at both robots and tools together, the combined fall in robot and tool prices increased employment by 0.3 percent and workers’ welfare by about 5.1 percent. While the adoption of robots may lead to job losses for specific tasks, the workers end up in new jobs that involve operating labor-augmenting instruments.
