Robots, Reshoring, and the Lot of Low-Skilled Workers

Arbeitspapier

We propose a theoretical framework to analyze the offshoring and reshoring decisions of firms in the age of automation. Our theory suggests that increasing productivity in automation leads to a relocation of previously offshored production back to the home economy but without improving low-skilled wages and without creating jobs for low-skilled workers. Since it leads also to increasing wages for high-skilled workers, automation-induced reshoring is associated with an increasing skill premium and increasing inequality. We develop a measure for reshoring activity at the macro-level and, using data from the world input output table, we provide evidence for automation-driven reshoring. On average, within manufacturing sectors, an increase by one robot per 1000 workers is associated with a 3.5% increase of reshoring activity. Using robots in countries with similar sectoral structure as an instrument, we find that an increase by one robot per 1000 workers causes a 2.5% increase of reshoring activity. We also provide the first cross-country evidence that reshoring is positively associated with wages and employment for high-skilled labor but not for low-skilled labor and that tariffs increase the degree of reshoring.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GLO Discussion Paper ; No. 443

Classification and Topics

• Classification: Wirtschaft ; Trade Policy; International Trade Organizations ; Economic Impacts of Globalization: Macroeconomic Impacts ; Wage Level and Structure; Wage Differentials ; Technological Change: Choices and Consequences; Diffusion Processes
• Subject: Automation ; Reshoring ; Employment ; Wages ; Inequality ; Tariffs

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krenz, Astrid ; Prettner, Klaus ; Strulik, Holger
• Event: Veröffentlichung
• (who): Global Labor Organization (GLO)
• (where): Essen
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/210483
• Last update: 10.03.2025, 11:45 AM CET