Robots and inequality in Latin America: whose wages improve when automation is imported?

Abstract

Abstract We explore the consequences of robotization on labor income of all deciles in Latin America by estimating an unbalanced two-way fixed effects panel for 2004–2017. Results show that a raise in Latin American robotization favors middle skilled workers, specifically the labor income of deciles 5 and 6, which can be explained by the complementarity effect between machines and workers in the occupations associated to these deciles. Imports of robots in these countries are characterized by their reduced technology, which could increase the productivity of the majority of medium-skilled workers in deciles 5 and 6, that are non-agricultural workers, drivers of machinery and transport vehicles. Since the wages of low-skilled workers in Latin America are low compared to the cost of robots, these types of workers are not yet affected.