Firm-Level Robot Use and Labor Cost Behavior

55 Pages Posted: 30 Dec 2022 Last revised: 27 Mar 2024

See all articles by Johannes Voshaar

Johannes Voshaar

University of Bremen - Faculty of Business Studies and Economics - Chair of Accounting and Control; John Molson School of Business, Concordia University

Thomas R. Loy

University of Bremen

Michael Koch

Aarhus University - Department of Economics and Business Economics

Date Written: December 29, 2022

Abstract

This study uses a unique data set of Spanish manufacturing firms to examine the effect of firm-level use of industrial robots on labor cost adjustments. In a matched sample approach, we find evidence that the adoption of robots affects firms’ workforce composition, hiring policies, and training expenses. All three indicate that robot use creates a greater demand for high-skilled workers to perform complementary and complex tasks (i.e., upskilling). With the adoption and use of industrial robots, human workers’ jobs shift toward more skilled labor like installing, programming, maintaining, and overseeing robots. Using the standard cost stickiness model, we find this also affects managerial resource adjustment decisions. Our results suggest robot-using firms exhibit greater labor cost stickiness than non-robot-using firms. As skilled labor is associated with higher labor adjustment costs, managers seem less willing to adjust labor resources during downturns. Our findings go contrary to the widespread notion that robots are “stealing” human jobs.

Keywords: labor cost behavior, labor adjustment costs, robots, automation, upskilling

JEL Classification: J21, J3, J82, M41, O33

Suggested Citation

Voshaar, Johannes and Loy, Thomas R. and Koch, Michael, Firm-Level Robot Use and Labor Cost Behavior (December 29, 2022). Available at SSRN: https://ssrn.com/abstract=4315287 or http://dx.doi.org/10.2139/ssrn.4315287

Johannes Voshaar (Contact Author)

University of Bremen - Faculty of Business Studies and Economics - Chair of Accounting and Control ( email )

Bremen, D-28359
Germany

John Molson School of Business, Concordia University ( email )

Montreal
Canada

Thomas R. Loy

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Michael Koch

Aarhus University - Department of Economics and Business Economics ( email )

Fuglesangs Allé 4
Aarhus V, 8210
Denmark

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