Professor Daiji Kawaguchi‘s co-authored paper entitled “Robots and Employment: Evidence from Japan, 1978-2017” has been accepted by the Journal of Labor Economics.
This paper was written together with Assistant Professor Daisuke Adachi of Denmark’s Aarhus University and Associate Professor Yukiko Saito of Waseda University,
Main points
Japan is an advanced robotics country that has been a global pioneer in adopting robots for industrial processes. Using employment data and examining the lengthy period of 40 years over which Japan has adopted robots, from 1978 to 2017, we analyzed the effect of adopting robots on employment.
Concerns abound that automated technologies, such as robots and artificial intelligence, will eliminate the number of jobs available for humans, and research results obtained in the US indicate that the adoption of robots decreases employment. However, in Japan, a pioneer in robotics, it is clear that robots have instead increased employment. Increases in productivity due to the adoption of robots led to expansions in production, which are linked to increased employment.
Automated technologies affect employment primarily via two pathways. The first is a substitution effect, that is, automated technologies can be substituted for human labor, which acts to decrease employment. The other pathway is that the adoption of automated technologies increases productivity, decreases production prices, and expands production, that is, a productivity effect that acts to increase employment. As for which of these effects is greater, the substitution effect or the productivity effect, if we rely on the surrounding environment, such as product and labor markets, to answer this question, the effect of automated technologies on employment is sometimes negative and sometimes positive. The results of this study indicate what kind of conditions are necessary to achieve the interdependence of new technologies and labor, which is shown to increase the productivity effect.
Overview
Professor Daiji Kawaguchi of the Graduate School of Public Policy at the University of Tokyo, together with Assistant Professor Daisuke Adachi of Denmark’s Aarhus University and Associate Professor Yukiko Saito of Waseda University, showed that the adoption of robots increases employment.
While the adoption of robots provides a substitute for labor, it is also theorized to expand product demand by lowering production costs, which in turn influences employment. Empirical research on this point was done by combining data on the adoption of robots with government statistics. The results of the analysis indicate that introducing robots decreases the cost of products such as automobiles, increasing product demand and expanding employment as a result.
While it is feared that automated technologies such as robots and artificial intelligence will decrease employment, Japan’s experiences show that the adoption of new technologies can increase employment and improve productivity and wages under an appropriate environment, an important perspective in examining the interdependence of new technologies and humans.
The results of this study are published in the online edition of the Journal of Labor Economics. The study was carried out with the support of the Japan Science and Technology Agency (Grant No. JPMJRX18H3) and the Research Institute of Economy, Trade, and Industry.
Further information is available from the links below.
GraSPP Blog | Robots increase employment
Journal of Labor Economics | Robots and Employment: Evidence from Japan, 1978-2017
Contact:
Daiji Kawaguchi
Professor
Graduate School of Public Policy, The University of Tokyo
03-5841-5508
kawaguchi(at)e.u-tokyo.ac.jp