Productive robots and industrial employment: the role of national innovation systems

We examine robot-labour substitutions in manufacturing and some other sectors in industrial countries. We show that the degree of substitution depends on demand and production elasticities. In multicountry empirical work its sign and magnitude crucially depends on a country's innovation environment. Making use of World Economic Forum data we estimate that countries with poor innovation capabilities substitute robots for workers but countries with richer innovation capabilities complement them. In non-manufacturing and transport equipment robots and workers are stronger substitutes than in other manufacturing. Our results can be rationalized by appeal to both Örm objectives and international trade