When robots do (not) enhance job quality: The role of innovation regimes

Damiani, Mirella and Pompei, Fabrizio and Kleinknecht, Alfred (2020): When robots do (not) enhance job quality: The role of innovation regimes.

Abstract

Whether robots have a positive or negative impact on job quality and wages depends on the dominant innovation regime in an industry. In an innovation regime with a high cumulativeness of knowledge, i.e. if accumulation of (tacit) knowledge from experience (embodied by workers) is important for innovation, robots enhance the probability that workers will get permanent (other than temporary) contracts and they earn higher wages. The opposite holds for industries with a low-cumulativeness regime when innovation depends mainly on general (and generally available) knowledge. Our results emerge from multi-level estimates of two countries (Italy and Germany), combining sectoral data on robot use with person-level data on properties of workers. Our results imply that previous studies tended to find weak effects of robotization as they did not control for innovation regimes. An implication for European industrial policy is that the hiring of more flexible personnel (and shorter job tenures) that has become popular in the period of supply-side economics is likely to have a negative impact on the productive use of robot technology in industries with a high cumulativeness of knowledge, and less so in low-cumulativeness industries. Unqualified pleas for labour market deregulation can have a problematic impact on technology and should be reconsidered.

• Item Type: MPRA Paper
• Language: English
• Keywords: robots, quality of work, innovation regimes, knowledge cumulativeness
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights

References

Acemoglu, D. & Autor, D. (2012). What does human capital do? A review of Goldin and Katz's ‘The race between education and technology’, Journal of Economic Literature, 50(2), 426-63.

Acemoglu, D., & Restrepo, P. (2019). Automation and new tasks: how technology displaces and reinstates labor. Journal of Economic Perspectives, 33(2), 3-30.

Acemoglu, D. and Restrepo, P., 2020. Robots and jobs: Evidence from US labor markets. Journal of Political Economy, 128(6), pp.2188-2244.

Andrews, D, Criscuolo, C. & Gal P.N. (2015) Frontier firms, technology diffusion and public policy, OECD Working Papers 2015-12, Paris: OECD.

Addison, J. T., Teixeira, P., Grunau, P., & Bellmann, L. (2018), ," IZA Discussion Papers 11378, Institute of Labor Economics (IZA).

Arntz, M., T. Gregory, and Zierahn, U. (2016). The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis. OECD Social, Employment and Migration Working Papers, No. 189, OECD Publishing.

Autor, D. (2014). Polanyi's paradox and the shape of employment growth (Vol. 20485). Cambridge, MA: National Bureau of Economic Research.

Autor, D.H. (2015). Why are there still so many jobs? The history and future of workplace automation. Journal of economic perspectives, 29(3), 3-30.

Booth, A. L., Francesconi, M., & Frank, J. (2002). Temporary jobs: stepping stones or dead ends?. The Economic ournal, 112(480), F189-F213.

Bosio, G. (2014). The Implications of Temporary Jobs on the Distribution of Wages in Italy: An Unconditional IVQTE Approach. Labour, 28(1), 64-86.

Bowles, J. (2014) ‘The computerization of European jobs’, Bruegel Blogpost, available at http://bruegel.org/2014/07/the-computerisation-of-european-jobs/

Braverman, H. (1974). Labor and monopoly capital: The degradation of work in the twentieth century, New York: Monthly Review Press.

Breschi, S., Malerba, F. and Orsenigo, L. 2000. Technological regimes and Schumpeterian patterns of innovation, Economic Journal, vol. 110, no. 463, 288–410

Brown, C. & Medoff, J. (1989) The employer size–wage effect, Journal of Political Economy, 97, pp. 1027–1059.

Bryan, M. L., & Jenkins, S. P. (2016). Multilevel modelling of country effects: A cautionary tale. European sociological review, 32(1), 3-22.

Brynjolfsson, E., Mitchell, T., & Rock, D. (2018). What can machines learn, and what does it mean for occupations and the economy? In AEA Papers and Proceedings, Vol. 108, pp. 43-47).

Cameron, A. C., & Trivedi, P. K. (2009). Microeconometrics using stata, Vol. 5, p. 706, College Station, TX: Stata press.

Chiacchio, F., Petropoulos, G., & Pichler, D. (2018). The impact of industrial robots on EU employment and wages: A local labour market approach. Bruegel Working Paper Issue 02/18 April 2018.

Damiani, M., Pompei, F., & Ricci, A. (2016). Temporary employment protection and productivity growth in EU economies. International Labour Review, 155(4), 587-622.

Dauth, W., S. Findeisen, J. Südekum, and N. Woessner (2017) ‘German robots-the impact of industrial robots on workers’ CEPR Discussion Paper No. DP12306.

Dauth, W., S. Findeisen, J. Südekum, and N. Woessner (2018), Adjusting to Robots: Worker-Level Evidence.” Institute Working Paper 13, Opportunity and Inclusive Growth Institute.

Degryse, C. (2016). Digitalisation of the economy and its impact on labour markets. ETUI Research Paper-Working Paper.

Devicienti, F., Naticchioni, P., & Ricci, A. (2018). Temporary employment, demand volatility, and unions: Firm-level evidence. ILR Review, 71(1), 174-207.

Dottori, D. (2020). Robots and employment: evidence from Italy. Bank of Italy Occasional Paper No. 572 (July).

Eichhorst, W. (2014). Fixed-term contracts. IZA World of Labor. Website: https://wol.iza.org/uploads/articles/45/pdfs/fixed-term-contracts.pdf.

Eurofound (2015), Recent developments in temporary employment: Employment growth, wages and transitions, Publications Office of the European Union, Luxembourg.

Eurofound (2020). Labour market change: Trends and policy approaches towards flexibilisation, Challenges and prospects in the EU series, Publications Office of the European Union, Luxembourg.

Fernández-Macías, E., Klenert, D. & Antón, J.(2020), Not so disruptive yet? Characteristics, distribution and determinants of robots in Europe, Seville: European Commission, JRC120611.

Foster, L., Grim, C., Haltiwanger, J. C., & Wolf, Z. (2018). Innovation, productivity dispersion, and productivity growth. National Bureau of Economic Research. n. 24420.

Frey, C. B. and Osborne, M. A. (2017). The future of employment: How susceptible are jobs to computerization? Technological Forecasting & Social Change, 114:254–280.

Gibbs, M. (2017). How is new technology changing job design? IZA World of Labor.

Graetz, G., & Michaels, G. (2018). Robots at work. Review of Economics and Statistics, 100(5), 753-768.

Hoxha, S. & Kleinknecht, A. (2020): ‘When labor market rigidities are useful for innovation. Evidence from German IAB firm-level data’, in Research Policy, Vol. 49(7): September (https://doi.org/10.1016/j.respol.2020.104066).

International Federation of Robotics (2016) ‘World Robotics Industrial Robots 2016’ International Federation of Robotics, https://ifr.org/img/office/Industrial_Robots_2016_Chapter_1_2.pdf.

International Labour Office. (2013). Global employment trends for youth 2013: A generation at risk. Geneva.

Kleinknecht, A. (2020). The (negative) impact of supply-side labour market reforms on productivity: an overview of the evidence. Cambridge Journal of Economics, 44(2), 445-464.

Kleinknecht, A., van Schaik, F. N., & Zhou, H. (2014). Is flexible labour good for innovation? Evidence from firm-level data. Cambridge journal of economics, 38(5), 1207-1219.

Klepper, S. (1996). Entry, exit, growth, and innovation over the product life cycle. The American Economic Review, 86(3), 562-583.

Klepper, S., & Miller, J. H. (1995). Entry, exit, and shakeouts in the United States in new manufactured products. International Journal of Industrial Organization, 13(4), 567-591.

Loh E. (1994) ‘Employment Probation as a Sorting Mechanism’, Industrial and Labor Relations Reviews, ILR School, Cornell University, 47(3): 471–486.

Lucidi, F., & Kleinknecht, A. (2010). Little innovation, many jobs: An econometric analysis of the Italian labour productivity crisis. Cambridge Journal of Economics, 34(3), 525-546.

Malerba, F., & Orsenigo, L. (1997). Technological regimes and sectoral pattern of innovative activities, Industrial and Corporate Change 6: 173–94.

Michaels, G., Natraj, A., & Van Reenen, J. (2014). Has ICT polarized skill demand? Evidence from eleven countries over twenty-five years. Review of Economics and Statistics, 96(1), 60-77.

Fernández-Macías, E., Klenert, D., Antón, J. (2020). Not so disruptive yet? Characteristics, distribution and determinants of robots in Europe, Seville: European Commission, JRC120611.

OECD (2014). OECD Employment Outlook, OECD Publishing Paris.

OECD (2017), OECD Employment Outlook 2017, OECD Publishing, Paris.

OECD (2019). OECD employment outlook 2019: The future of work. OECD Publishing, Paris.

Peneder, M. (2010). Technological regimes and the variety of innovation behaviour: Creating integrated taxonomies of firms and sectors. Research Policy, 39(3), 323-334.

Picchio, M. (2006). Wage differentials between temporary and permanent workers in Italy. Ancona: Università Politecnica delle Marche.

Polanyi, M. (1966). The Tacit Dimension. New York: Doubleday.

Sabatino, M., (2016). The de-industrialization process in South Italy and the new industrial policies in Europe. 56th Congress of the European Regional Science Association: "Cities & Regions: Smart, Sustainable, Inclusive?", 23-26 August 2016, Vienna, Austria, European Regional Science Association (ERSA), Louvain-la-Neuve.

Snijders, T., & Bosker, R. (1999). Multilevel modelling: An introduction to basic and advanced multilevel modelling. London: Sage Publications.

Vergeer, R., Dhondt, S., Kleinknecht, A. & Kraan, K. (2015) ‘Will “structural reforms” of labour markets reduce productivity growth? A firm-level investigation’, European Journal of Economics and Economic Policy, Vol. 12(3): 300-317.

Vivarelli, M. (2014). Innovation, employment and skills in advanced and developing countries: A survey of economic literature. Journal of Economic Issues, 48(1), 123-154.

Wachsen, E., & Blind, K. (2016). More labour market flexibility for more innovation? Evidence from employer–employee linked micro data. Research Policy, 45(5), 941-950.

Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. MIT press.