Industrial Robot Application and Employment Reallocation

Mao Risheng*

Institute of World Economics and Politics, Chinese Academy of Social Sciences (IWEP-CASS), Beijing, China

Abstract: In recent years, a new generation of robots integrated with artificial intelligence has rapidly proliferated across China. Drawing on firm-level tax survey data (2010-2016), city-level data (1999-2019), and micro-data from the China Labor-force Dynamics Survey (2012-2018), this paper constructs an instrumental variable based on city-level robot penetration to investigate the regional employment effects of robot adoption from multiple perspectives. The main findings are as follows: (1) Widespread robot adoption significantly strengthens the market position of incumbent firms, supports overall employment growth within these firms, and facilitates labor reallocation across sectors, with labor tending to shift toward industries characterized by larger average firm size. (2) Evidence at both the aggregated level and the individual level shows that while robot adoption markedly improves firm productivity, it slows the pace of job creation while simultaneously reducing job displacement. As a result, labor mobility at the regional level shows a declining trend. (3) Robot adoption generates significant market spillover effects. It fosters employment growth among incumbent firms but tends to slow the pace of entry of new firms, an important mechanism behind the observed deceleration in regional employment growth. (4) Heterogeneity analysis reveals that robots have a greater impact on job transitions for highly educated and middle-aged workers, increasing their preference for stable employment. No significant differences are found across occupational types or between genders in terms of job mobility impacts.

Keywords: Artificial intelligence; robots; employment growth; employment reallocation JEL Classification Codes: J01; O33