Impact of Industrial Robots on Labor Income Share: Empirical Evidence from Chinese A-Listed Companies

Abstract

Based on data from the International Federation of Robotics (IFR) and Chinese A-Share Listed Companies 2011–2019, this paper evaluates how the penetration of industrial robots in China affects the labor income share from both theoretical and empirical perspectives. We first develop a theoretical framework considering robots in the task model, consider different tasks matching different types of labor, construct a labor income share model including robots based on the task model, and perform a theoretical analysis finding that industrial robots can improve labor income. Then, we explore the mechanism of labor price distortion as an intermediate variable that can reduce the labor income share, finding that robots are able to effectively reduce the negative impact of labor price distortions on labor income share. After correcting for potential endogeneity problems, the results confirm a positive, significant, and lasting impact of industrial robot penetration on labor income share, confirming that labor price distortion is the underlying mechanisms through which the robots can effectively reduce the negative impact of labor price distortions on labor income share. At the same time, the impact of robots on firms’ labor income shares varies significantly across different regions, external financial dependence, and skill premiums. Our findings can help the government to provide a decision-making basis for how industrial robots can better serve people in the new century, ensuring that people can share in the achievements of economic development.