Must-Read: Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, and Nicole Woessner: The rise of robots in the German labour market

Must-Read: Using technology and, more important, social institutions to build and deploy tools in ways that augment labor, rather than substitute for labor:

Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, and Nicole Woessner: The rise of robots in the German labour market: “Robots have had no aggregate effect on German employment, and robot exposure is found to actually increase the chances of workers staying with their original employer… http://voxeu.org/article/rise-robots-german-labour-market#.WdHelWvyXW8.twitter

…Robots are much more prevalent in Germany than in the US or elsewhere outside Asia…. Usage… and now stands at 7.6 robots per thousand workers compared to only 2.7 and 1.6 in Europe and the US, respectively…. Moreover, Germany is not only a heavy user but also an important engineer of industrial robots…. We regress total local employment growth on… robot exposure…. The raw correlation between robots and growth is even positive… strongly driven by the automobile industry….

We calculate that one additional robot replaces two manufacturing jobs on average…. But those sizable losses are fully offset by job gains outside manufacturing…. Robot-exposed workers… have a substantially higher probability of keeping a job at their original workplace…. Robot exposure causes notable on-the-job earnings gains for high-skilled workers, especially in scientific and management positions….

We believe that those empirical findings reflect a key feature of industrial relations in the German labour market – the manufacturing sector is still highly unionised, and blue-collar wages (especially) are typically determined collectively with strong involvement of work councils. It has been frequently argued that German unions have a strong preference for maintaining high employment levels, and are willing to accept flexible wage setting arrangements, such as opening clauses, in the presence of negative shocks in order to keep jobs…