Robots and Non-participation in the US: Where Have All the Workers Gone?

Abstract

I analyze the impact of one of the leading automation technologies of the last decades – industrial robots – on the declining labor force participation in the US. Exploiting exogenous variation in the adoption of robots across local labor markets and over time, I find that, on average, one additional robot drives two workers out of the labor force. The massive increase in robot adoption between the mid-1990s and 2014 explains about 15 percent of the decline in labor force participation in these years. I next investigate the channels through which automation affects nonparticipation and find that robot adoption leads to rising university enrollment rates among the young, early retirement of older workers and a considerable fraction of middle-aged workers enrolling in disability insurance.