Robots, Tasks and Trade

71 Pages Posted: 14 Dec 2018 Last revised: 1 Aug 2019

See all articles by Erhan Artuc

Erhan Artuc

World Bank; World Bank - Development Research Group (DECRG)

Paulo Bastos

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Bob Rijkers

World Bank

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Date Written: December 13, 2018

Abstract

This paper examines the effects of robotization on trade patterns, wages and welfare. It develops a Ricardian model with two-stage production and trade in intermediate and final goods in which robots can take over some tasks previously performed by humans in a subset of industries. An increase in robot adoption in the North reduces the cost of production and thereby impacts trade in final and intermediate goods with the South. The empirical analysis uses ordinary least squares and instrumental variable regressions exploiting variation in exposure to robots across countries and sectors. Both reveal that greater robot intensity in own production leads to: (i) a rise in imports sourced from less developed countries in the same industry; and (ii) an even stronger increase in exports to those countries. Counterfactual simulations indicate that Northern robotization raises domestic welfare, but initially depresses wages. However, this adverse effect is likely to be reversed by further reductions in robot prices. Northern robotization may lead to higher wages and welfare in the South.

Keywords: International Trade and Trade Rules, Labor Markets, Plastics & Rubber Industry, Textiles, Apparel & Leather Industry, Pulp & Paper Industry, Food & Beverage Industry, Common Carriers Industry, Construction Industry, Business Cycles and Stabilization Policies, General Manufacturing, Rural Labor Markets

Suggested Citation

Artuc, Erhan and Bastos, Paulo and Rijkers, Bob, Robots, Tasks and Trade (December 13, 2018). World Bank Policy Research Working Paper No. 8674, Available at SSRN: https://ssrn.com/abstract=3301062

Erhan Artuc (Contact Author)

World Bank ( email )

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World Bank - Development Research Group (DECRG)

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Paulo Bastos

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE) ( email )

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Lisboa, 1200-781
Portugal

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

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Portugal

Bob Rijkers

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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