Robots, ICT and employment: evidence from advanced and emerging EU countries
Summary
Focus
Robots and digital technologies have been spreading across industries, raising fundamental questions about their impact on employment. We study how robot adoption and investment in information and communication technologies (ICT) at the sector level affect employment and hours worked across 20 European Union (EU) countries from 1995 to 2020. Our analysis compares sectors with different starting levels of robot adoption and different ICT intensity to illustrate how initial conditions and complementary investments in technology shape labour market outcomes.
Contribution
We find that the impact of robots on employment depends on two key conditions: the sector's initial level of robotisation and its rate of ICT investment over time. Unlike previous work which often reports average effects across sectors or countries, our analysis uncovers strong state-dependencies which can account for when investment in technology tends to complement workers and when it risks displacing them. This perspective helps to interpret contrasting findings in the literature and provides policymakers with a clearer view of where further automation may support employment and where it may risk job losses.
Findings
Our paper points to two clear patterns. First, in sectors with no robots at the start of our period of observation, greater robot adoption and higher ICT investment are linked to faster growth in employment and hours worked. In this early stage of adoption, new technologies tend to complement labour. Second, by contrast, in sectors that already used robots, the relationship turns non-linear. Employment still rises at a stronger pace with faster robot adoption when ICT investment is modest and similarly grows stronger with higher ICT investment when the degree of robot adoption is limited. However, when sectors combine strong robot adoption with high ICT investment, employment growth tends to weaken and can turn negative in response to additional robot adoption or additional ICT investment. Specifically, our estimates suggest that a one standard deviation increase in robotisation raises annual employment growth by about 0.8 percentage points in low-ICT investment settings, while the same increase lowers employment growth by about 0.4 percentage points in high-ICT investment settings. Similar results for hours worked suggest that labour market adjustments to technology investments occur mainly through changes in headcount, rather than through internal adjustments in working time.
Abstract
We study how robot adoption and investment in information and communication technologies (ICT) jointly shape sectoral employment across 20 European Union (EU) countries over the period 1995-2020. Using a cross-sectional regression design that interacts changes in robot adoption with ICT investment, we find that increases in robot adoption are associated with higher employment in sectors that either entered the period without robots or invested little in ICT. By contrast, robot adoption is associated with lower employment in sectors that initially had some robots and high ICT investment. These findings highlight the importance of both initial conditions and complementary technology investment in shaping labour-market outcomes, suggesting that the employment effects of technology are highly context-dependent.
JEL Classification: E23, O33, J24
Keywords: ICT capital, employment, labour market, technology adoption, European Union
