How robots hurt jobs in emerging economies.

Automation can spur productivity in emerging economies but lead to displeasure and insecurity in the short run, says study.

Automation, a growing part of daily life, can make work easier but has also raised concerns about potential disruption and job loss. According to one World Bank estimate, two-thirds of jobs in developing countries could be lost to automation.

A new research study by Osea Giuntella and Tianyi Wang published by the IZA Institute of Labour Economics, Germany, which explores the implications of automation in China, adds to these concerns.

To measure the impact of automation on the Chinese labour market, the author examined data from the International Federation of Robotics (IFR) for countries’ robotic exposure between 2000-2016, the Chinese government’s National Bureau of Statistics data on city-level employment and wages and other datasets.

They found that employment and wages suffer due to automation. Low skilled men (less than secondary-level of education) and older men (above 44 years of age) were the most affected.

They also observed significant impact on jobs in the manufacturing sector and state-owned firms, which can be attributed to the higher adoption of robotics in these sectors, a result of China’s increased investment in industrial robots to boost its industrial productivity.

The research suggests that though automation can increase productivity, it has several societal and political implications. In emerging economies, automation can lead to widespread displeasure and insecurity in the short run. The authors found an increase in workers’ protests and strikes triggered by job losses and wage issues. They also found workers tend to migrate less to cities with higher robotic penetration owing to the lower wages.

According to the authors, the effects of automation will be starker in emerging economies than in developed countries due to the dominance of agriculture and manufacturing sectors. This should be a matter of policy concern for emerging economies where inequality and unemployment are already major issues.