Robots, Tasks and Trade
This paper examines the effects of robotization on trade patterns, wages and welfare. It develops a Ricardian model with two-stage production and trade in intermediate and final goods in which robots can take over some tasks previously performed by...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/269231544735360818/Robots-Tasks-and-Trade http://hdl.handle.net/10986/31076 |
| Summary: | This paper examines the effects of
robotization on trade patterns, wages and welfare. It
develops a Ricardian model with two-stage production and
trade in intermediate and final goods in which robots can
take over some tasks previously performed by humans in a
subset of industries. An increase in robot adoption in the
North reduces the cost of production and thereby impacts
trade in final and intermediate goods with the South. The
empirical analysis uses ordinary least squares and
instrumental variable regressions exploiting variation in
exposure to robots across countries and sectors. Both reveal
that greater robot intensity in own production leads to: (i)
a rise in imports sourced from less developed countries in
the same industry; and (ii) an even stronger increase in
exports to those countries. Counterfactual simulations
indicate that Northern robotization raises domestic welfare,
but initially depresses wages. However, this adverse effect
is likely to be reversed by further reductions in robot
prices. Northern robotization may lead to higher wages and
welfare in the South. |
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