| Abstract: |
In recent years, the surge in industrial robot usage has been prominently
driven by labor costs. However, the impact of cost-related shocks on firms’
decisions to integrate robots has received limited attention. This study
investigates how manufacturing firms in Turkey reacted to a sudden 33.5%
increase in the minimum wage in 2016 regarding their robot importation
decisions. Utilizing administrative employer-employee data, firm-level trade,
and balance sheet data, and employing a difference-in-differences approach
with a continuous treatment, we find that the minimum wage shock overall does
not significantly affect robot adoption. Yet, this effect varies by firm size;
medium-sized firms show a positive and significant propensity to adopt robots,
which is even more pronounced in large firms. Quantitatively, a one-point
increase in the share of minimum wage employment in total employment leads to
a 0.4% increase in the probability of importing robots for medium firms and a
2.7% increase for large firms. These findings are consistent across both
extensive and intensive margins of robot adoption. Firms with a high intensity
of blue-collar and routine task workers are particularly more likely to import
robot in response to a minimum wage shock. Moreover, competitive pressures in
the industries also spur firms towards robot adoption |