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Some Robot Economics
The NY Times has published a great piece about Acemoglu's co-authored piece on the economics of robots. The “headline” claim in Daron's new paper is that robots cost us jobs (substitutes not complements). I'd like to sketch a few claims that might explain their fact;
1. Robots don't need health insurance. In the language of economics, to employ a worker requires fixed costs (health insurance, life insurance) and variable costs (wages and benefits). As fixed costs of hiring workers rise, this increases the average cost for firms per hour worked and this encourages substitution from labor to capital (i.e hiring more robots).
2. Robots don't sue their employers. Do firms with higher K/L ratios have lower litigation bills as they face fewer lawsuits?
3. Robots don't go “postal” and harm fellow employees.
4. Robots don't engage in workplace sexual harassment (i.e again, fewer lawsuits).
5. Robots don't abuse alcohol and drugs and cause workplace accidents. This last point should be quantified. Of course robots can malfunction, but relative to the replacement humans do they malfunction as much? Has this been quantified.
6. Robots don't unionize and ask for wages above their marginal product. Robots don't go on strike or engage in work slowdowns.
Facing all of these expected costs, it is impressive that firms hire people. Do you see that the marginal product of a person must be much higher than the marginal product of a robot , given all of the expected costs from #1 to #6 above.
7. Now, in adapting to climate change — are robots or workers more resilient to indoor heat? As climate change heats up factories, will this favor robotic firms or worker based firms? This would be a nice extension of my 2016 paper with Graff-Zivin.
Source: http://greeneconomics.blogspot.com/2017/03/some-robot-economics.html
