Robots and Non-participation in the US: Where Have All the Workers Gone?

87 Pages Posted: 10 Aug 2020 Last revised: 14 Dec 2022

See all articles by Benjamin Lerch

Benjamin Lerch

University of Lugano - Faculty of Economics

Date Written: July 14, 2020

Abstract

The rapid advances in automation technologies are disrupting labor markets at an unprecedented speed, contributing to the secular decline in US labor force participation, and raising questions about where workers end up. This paper investigates the margins of adjustment of workers after being displaced by the introduction of industrial robots. Exploiting exogenous variation in the adoption of robots across local labor markets over time, I show that almost 8 percent of non-participants respond by enrolling in college, 10.5 percent claim disability benefits, and 40 percent retire early. The remaining non-participants rely on the income of their household members or live off their savings. These margins differ with the socio-demographic characteristics of the individuals. My results also show that the rising disability take-up has been fueled by a deterioration in non-participants’ health, including self-reported health problems and hospitalizations related to severe mental disorders and substance abuse.

Keywords: industrial robots, labor force participation, education, disability, early retirement

JEL Classification: I12, I26, J21, J26

Suggested Citation

Lerch, Benjamin, Robots and Non-participation in the US: Where Have All the Workers Gone? (July 14, 2020). Available at SSRN: https://ssrn.com/abstract=3650905 or http://dx.doi.org/10.2139/ssrn.3650905

Benjamin Lerch (Contact Author)

University of Lugano - Faculty of Economics ( email )

Via Giuseppe Buffi 13
CH-6900 Lugano, CH-6904
Switzerland

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