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Robots and firm investment

Author

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  • Benmelech, Efraim
  • Zator, Michał

Abstract

Using cross-country and German administrative data on robotization, we show that the impact of robots on firms and labor markets is limited. First, investment in robots is small and highly concentrated in a few industries, representing less than 0.3% of aggregate expenditures on equipment. Second, robotization does not grow as rapidly as Information Technology did in the past, and current growth is driven by gains in developing countries. Third, firms invest in robots when they face difficulties in finding workers and subsequently increase employment after the investment. The total employment effect in exposed industries and regions is negative but modest in magnitude. We discuss why the effects of robots are limited and demonstrate that other digital technologies have more potential for large economic impact.

Suggested Citation

  • Benmelech, Efraim & Zator, Michał, 2025. "Robots and firm investment," Journal of Financial Economics, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:jfinec:v:174:y:2025:i:c:s0304405x25001916
    DOI: 10.1016/j.jfineco.2025.104183
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    Keywords

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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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