ROBOT INVESTMENT AND INCREASE IN TOTAL EMPLOYMENT

Abstract

Robots have the potential to radically transform industries and employment. In contrast to previous studies at the industry level that predicted dramatic employment declines, Studies found that investments in robotics are associated with increases in total firm employment. This implies decreases in the total number of managers, middle-skilled workers and production processes. Increases in employment for low-skilled and high-skilled workers and potentially changing managerial activities required by the firm. This paper also finds that robot investments are associated with an increase in the span of control for managers remaining within the organization. There are evidences that robot adoption is not motivated by the desire to reduce labour costs, but is instead related to improving product and service quality. With respect to organizational change, this paper shows that robots predict both the centralization and the decentralization of decision-making authority, but decision rights in either case are reassigned away from the managerial level of the hierarchy.