Impact of Industrial BOTS on Employment, Skilled–Unskilled Wage Disparities and Talent Gap

Abstract

This paper investigates the impacts of industrial robots (BOTs) on the employment of skilled and unskilled labour within the manufacturing sector. We employ an empirical approach to analyse the data and complement the empirical findings with a theoretical framework. The results suggest a negative impact of BOT adoption on the employment of low-skilled workers, while skilled workers experience minimal effects. Interestingly, the study also finds a reduction in the wage gap between skilled and unskilled labour. A General Equilibrium framework underpins the theoretical explanation for these empirical observations. The model highlights the presence of a talent gap within the low skilled labourers within the manufacturing sector despite the continued demand for low-skilled labour. This gap impedes employment growth for low-skilled workers, even as their wages potentially increase. Thus, increased robot utilization may lead to higher wages but lower employment of the low skilled labourers within the industrial sector. Additionally, the paper incorporates secondary evidence from anecdotal surveys to bolster the research conclusions.