04 March 2020

How robots change the world: Their impact on regional inequalities

Edward Cone
Richard Holt
Michael Zielenziger

The spread of robots across the workplace, and especially within manufacturing, is widely known. This paper reports on how robots have impacted directly on manufacturing jobs, and indirectly on national GDP growth via productivity gains, across a range of advanced economies. By the use of econometric modelling, our team have shown that there are overall gains despite significant job losses within industries. Crucially, however, we find that those regions whose residents have lower income levels have tended to lose twice the number of jobs, per robot, compared with those regions with higher average income levels. The consequence is a significant risk that in countries such as the United Kingdom, regional inequalities will increase—a challenge potentially made even greater as robots spread to occupations that have traditionally provided the destination for displaced factory workers. This creates a challenge for policy makers, who are likely to face political pressures to spread the dividends of robotization more evenly. Recent political developments across a range of advanced economy nations suggest that the pressures on policy makers are already mounting.