Robots in an Aging Population

You might think robots and other forms of workplace automation gain traction due to their intrinsic value in reducing the cost of doing business. But a study co-authored by an MIT professor tells a different story: Robots are more widely adopted where populations become notably older, filling the gaps in an aging industrial work force.

“Demographic change — aging — is one of the most important factors leading to the adoption of robotics and other automation technologies,” says Daron Acemoglu, an MIT economist and co-author of a new paper detailing the results of the study.

The study finds that when it comes to the adoption of robots, aging alone accounts for 35% of the variation among countries. Within the U.S., the research shows the same pattern: Metro areas where the population is getting older at a faster rate are the places where industry invests more in robots.

“We provide a lot of evidence to bolster the case that this is a causal relationship, and it is driven by precisely the industries that are most affected by aging and have opportunities for automating work,” Acemoglu said.

This study involved multiple layers of demographic, technological and industry-level data, largely from the early 1990s through the mid-2010s. The researchers found a strong relationship between an aging work force — defined by the ratio of workers 56 and older to those ages 21 to 55 — and robot deployment in 60 countries. Aging alone accounted for not only 35% of the variation in robot use among countries, but also 20% of the variation in imports of robots.

Other data points involving particular countries also stand out, the researchers said. South Korea has been the country both aging most rapidly and implementing robotics most extensively. And Germany’s relatively older population accounts for 80% of the difference in robot implementation between that country and the U.S.

The research likely sheds light on larger-scale trends as well. In recent decades, workers have fared better economically in Germany than in the U.S. The current research suggests there is a difference between adopting automation in response to labor shortages, as opposed to adopting automation as a cost-cutting, worker-replacing strategy. In Germany, robots have entered the workplace more to compensate for the absence of workers, while in the U.S., relatively more robot adoption has displaced a slightly younger workforce.

“This is a potential explanation for why South Korea, Japan, and Germany — the leaders in robot investment and the most rapidly aging countries in the world — have not seen labor market outcomes [as bad] as those in the U.S.,” Acemoglu notes.

The paper, “Demographics and Automation,” has been published online by The Review of Economic Studies, and will be appearing in a forthcoming print edition of the journal. The authors are Acemoglu, an institute professor at MIT, and Pascual Restrepo PhD, an assistant professor of economics at Boston University. The study is the latest in a series of papers published about automation, robots and the workforce.