Abstract
This paper provides novel evidence on the economic impact of industrial automation in a large developing economy. It combines labor force survey and plant-level data from Indonesia in the period 2008-2015, when imports of robots to the country increased rapidly. In contrast to much of the existing evidence, the findings suggest that robotization had an overall positive impact on manufacturing employment in Indonesia. The plant-level analysis shows that this effect is consistent with automation increasing the productivity of plants’ operation, which allows them to expand sales and exports. The productivity effect offsets the labor displacing effect of robots on production workers and raises plants’ demand for domestic inputs. Such backward linkages help explaining the positive impact of robots on local labor market and may provide a rationale for incentivizing the adoption of industrial robots by manufacturing plants. We also provide evidence of a significant inequality-inducing effect of automation.
Invited by: Research seminar Team
Local Organizer: Massimiliano Onorato