Demographics and Automation

We argue theoretically and document empirically that aging leads to greater (industrial) automation, because it creates a shortage of middle-aged workers specializing in manual production tasks. We show that demographic change is associated with greater adoption of robots and other automation technologies across countries and with more robotics-related activities across U.S. commuting zones. We also document more automation innovation in countries undergoing faster aging. Our directed technological change model predicts that the response of automation technologies to aging should be more pronounced in industries that rely more on middle-aged workers and those that present greater opportunities for automation and that productivity should improve and the labor share should decline relatively in industries that are more amenable to automation. The evidence supports all four of these predictions.

Automated summary

Aging leads to increased automation, especially in industries that rely on middle-aged workers and present opportunities for automation. Demographic change is associated with greater adoption of robots across countries and more robotics-related activities in U.S. commuting zones. Countries undergoing faster aging experience more automation innovation.