Higher Education Expansion And the Adoption of Robots in China
52 Pages Posted: 20 May 2024
Abstract
This paper investigates the effect of higher education expansion on firm adoption of robots. We use higher education expansion in 1999 of China as a quasi-natural experiment and exploit the subsequent surge in the supply of college-educated labor from 2003 as the exogenous shock. Using the difference-in-differences estimation strategy, we find that firms in human capital-intensive industries employ less robots after 2003, mitigating machine-to-human replacement. Our findings remain when excluding alternative explanations and conducting a series of robustness checks. The effect is more pronounced in non-SOEs, financially constrained firms, firms in labor-intensive industries, and coastal areas. Mechanism tests show that the reduction in robot adoption is motivated by the cheaper relative price of labor to robots, and a firm's upgrading of human capital structure, growth, and innovation activities. Overall, our study highlights the vital role of human capital upgrading in reducing labor replacement by robots, thereby influencing the job market.
Keywords: High education expansion, Human capital, Automation, Robots, Skilled labor
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