Shortage in middle aged labour leads to accelerated adoption of robots: MIT study
The adoption of automation and robotics is to some degree proportional to the increase in the ageing population in any given region, according to a new study, 'Demographics and Automation', co-authored by MIT economist Daron Acemoglu and Boston University professor of economics Pascual Restrepo. The study suggests that aging accounts for 35 percent of the difference between the rate of robotics adoption in different countries - in other words, countries and regions with an older population invest more heavily in robots.
“Our findings suggest that quite a bit of investment in robotics is not driven by the fact that this is the next ‘amazing frontier,’ but because some countries have shortages of labour, especially middle-aged labour that would be necessary for blue-collar work," said Acemoglu.
The study, which covered 60 countries, uses the ratio of workers aged 56 and older to workers aged 21 to 55 as an indicator of how much a population is aging. Not only does aging affect adoption, it also affects the extent to which a country imports robots: 20 percent of the difference between any two countries' imports of robotics technology can be attributed to aging.
Out of the countries studied, South Korea, Japan, and Germany top the chart in their rate of robotics investment and adoption. These are also among the most rapidly aging countries in the world.
The study found similar trends in the adoption of non-robotic forms of automation. But aging did not affect non-automated tools, suggesting that these are not considered suitable for addressing the shrinkage of the workforce.
Automation doesn't necessarily mean workers will be worse off
The study also looked into the relationship between automation and labour market outcomes, and found, surprisingly, less of a correlation than one might expect. For example, German workplaces are automated to a tremendous degree driven by aging - 80 percent of the difference in robot implementation between Germany and the US is attributed to the size of the aging population. But both older and younger workers in Germany are not suffering loss of employment, and often receive better pay and benefits than their counterparts in the US - where younger workers are being pushed out of the workplace by automation.
And the reason, says Acemoglu, is simply because businesses in the two countries have a different objective when automating. Businesses in Germany are trying to make up for the lack of manpower; businesses in the US are trying to reduce the amount of manpower they employ (and have to pay for).
The research suggests that adopting automation in response to labour shortages, as done in South Korea, Japan, and Germany, will produce much better outcomes for the workforce than adopting automation as a cost-cutting, worker-replacing strategy.
Automation has long been a bogeyman for those who fear its impact on workers. But the MIT study - and its preceding studies by Acemoglu and Restrepo, who have done extensive research on automation and the workforce - suggest in this respect that automation is not the real source of employment and compensation issues faced by the workforce. Rather, it's the choice of strategy by business leaders, and how automation is used, that will challenge workers' welfare.