Robots and Non-Participation in the United States: Where Have All the Workers Gone?

Abstract

The rapid advances in automation technologies are disrupting labor markets at an unprecedented speed, contributing to the secular decline in US labor force participation and raising questions about where workers shift to when they leave the labor force. This article investigates the margins of adjustment of workers after being displaced by the introduction of industrial robots. Exploiting exogenous variation in the adoption of robots across local labor markets over time, the authors show that almost 8% of non-participants respond by enrolling in college, approximately 10% claim disability benefits, and nearly 40% retire early. The remaining non-participants rely on the income of their household members or live off their savings. These margins differ with the sociodemographic characteristics of individuals. Results also show that robots have worsened non-participants’ health, including self-reported health problems and hospitalizations related to severe mental disorders and substance abuse.