Quotation Krenz, Astrid, Prettner, Klaus, Strulik, Holger. 2021. Robots, reshoring, and the lot of low-skilled workers. European Economic Review.




We propose a theoretical framework to analyze the offshoring and reshoring decisions of firms in the age of automation. Our theory suggests that increasing productivity in automation leads to a relocation of previously offshored production back to the home economy but without improving low-skilled wages and without creating jobs for low-skilled workers. Since it leads also to increasing wages for high-skilled workers, automation-induced reshoring is associated with an increasing skill premium and increasing inequality. We develop a measure for reshoring activity at the macro-level and, using data from the world input output table, provide evidence for automation-driven reshoring. On average, within manufacturing sectors, an increase by one robot per 1000 workers is associated with a 3.5% increase of reshoring activity. We corroborate the results using an IV regression framework. We also provide the first cross-country evidence that reshoring is positively associated with wages and employment for workers in professional occupations but not for workers in elementary-routine occupations and that tariffs increase the reshoring intensity.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal European Economic Review
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, VW-A, WH-B
Language English
Title Robots, reshoring, and the lot of low-skilled workers.
Year 2021
Reviewed? Y
URL https://www.sciencedirect.com/science/article/abs/pii/S0014292121000970
DOI https://doi.org/10.1016/j.euroecorev.2021.103744
Open Access N


Prettner, Klaus (Details)
Krenz, Astrid (University of Sussex, United Kingdom)
Strulik, Holger (University of Göttingen, Germany)
Department of Economics (Crespo Cuaresma) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5343 Economic theory (Details)
5371 Macroeconomics (Details)
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