Abstract:

In this study, we analyze the impacts of minimum wages on firms’ robot adoption using novel panel data related to robots imported by firms in China from 2001 to 2012, a period when most of China’s robots are imported. We find that minimum wages raise firms’ robot adoption significantly. The effects of minimum wages on robot adoption are larger for firms in routine-intensive industries, for firms in labor-intensive industries, and for large firms. Employing robots significantly increases firms’ value added, labor employment, labor productivity, total factor productivity, and average wages. The firm-level production function estimations show that on average, one robot replaces about 15 workers in China.