Robots reduce income inequality, just not in the way we want
The rise of automatisation and digitalisation is a key driver for the decline in blue-collar jobs across the United States and Western Europe. Populist politicians try to blame offshoring to China or Mexico for that effect, but the truth is in the outsourcing process, companies also increased the use of robots in order to save on labour costs generally. It’s not the Mexican or Chinese worker that took the job of Joe Sixpack, it is the company that manufactured the robot used in the assembly lane of car manufacturers everywhere.
And as these blue collar jobs disappeared, income inequality rose because these workers suddenly had no job to go to anymore. The resulting decline in labour market participation has hit men more than women because men were more dominant in the jobs that were automated. And the ironic result of that trend is that income inequality between men and women is declining, particularly amongst lower income families.
A new study shows that this kind of “levelling down” has all kinds of social consequences. To begin with, in what seems like a positive development, the labour market participation rate of women living in areas with higher penetration by robots increases. But this is merely a reflection of the fact that as men become unemployed, women are forced to find a job in service industries. And the stress of being made redundant or losing a stable income has its toll on families in the form of higher divorce rates and lower birth rates for married women (though ironically higher birth rates for unmarried women). In the end, the social cost of robots is much higher than we might think today and with the continued rise of automatisation, we can expect all kinds of social problems to rise as well – and with it the pressure of social safety nets and politicians to do something about it.