Robots, labor markets, and universal basic income

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      Automation is a big concern in modern societies in view of its widespread impact on many socioeconomic issues including income, jobs, and productivity. While previous studies have concentrated on determining the effects on jobs and salaries, our aim is to understand how automation affects productivity, and how some policies, such as taxes on robots or universal basic income, moderate or aggravate those effects. To this end, we have designed an experiment where workers make productive effort decisions, and managers can choose between workers and robots to do these tasks. In our baseline treatment, we measure the effort made by workers who may be replaced by robots, and also elicit firm replacement decisions. Subsequently, we carry out treatments in which workers have a universal basic income of about a fifth of the workers’ median wages, or where there is a tax levy on firms who replace workers by robots. We complete the picture of the impact of automation by looking into the coexistence of workers and robots with part-time jobs. We find that the threat of a robot substitution does not affect the amount of effort exerted by workers. Also, neither universal basic income nor a tax on robots decrease workers’ effort. We observe that the robot substitution tax reduces the probability of worker substitution. Finally, workers that benefit from managerial decisions to not substitute them by more productive robots do not increase their effort level. Our conclusions shed light on the interplay of policy and workers behavior under pervasive automation.

      Our first result is that the threat of substitution by robots does not change the productivity of workers, in contradiction with hypothesis 2. Figure 1 shows the production of the first phase for all participants in each of the 9 treatments. As can be seen from the graph, even if the dispersion varies across treatments, the means and medians are located almost perfectly on a horizontal, straight line. A t-test of difference in means also shows there are no statistical differences between the outputs of the first phase in the different treatments. In particular, there is no difference between the output in the first phase of the baseline treatment, when workers cannot be substituted by robots, and all the other treatments, when the substitution is possible. Hence, we conclude that there is no effect on effort on the threat of robot substitution. It is important to note for reference that the amount of points earned during this phase is approximately 17 points averaging over all treatments.

      Regarding the effects of universal basic income or taxes, from Fig. 1 we can conclude that the output in the first phase of those treatments is statistically the same as that observed in the baseline treatment. This implies that there is no disincentive to effort arising from either basic income or the tax on robots. This is in stark contrast with hypothesis 1 from the standard theoretical benchmark discussed in the previous section. As far as the universal basic income is concerned, further support comes when data are aggregated, as shown in Fig. 3, which compares the output of subjects in the first phase for treatments with and without basic income and suggests there are no differences. The t-test for differences in means again confirms there are no statistical differences in output between the two types of treatments. On the other hand, the bottom panel of Fig. 3 presents the production of participants in the first phase of endogenous treatment without basic income and without tax with the output of the first phase without basic income and with tax. The amount implemented as tax in the experiment was 3.4, to be compared with the average points earned in the baseline production phase of 17. As with the basic universal income, there are no statistical differences between the output of subjects when there is a tax and when there is not. Indeed, Fig. 3 has the same shape as the previous one, showing the similarity between the treatments with and without taxes.

      Another conclusion that arises from our experimental data is that a tax on the substitution of workers reduces the likelihood that workers are replaced. It has to be borne in mind that one of the policies that have been suggested in this situation of automation (Abbott and Bogenschneider, 2018; Guerreiro et al., 2017) consists precisely in the application of a tax when a human job is replaced by a robot. We measure the impact of the tax using a regression analysis. One of the variables is a dummy for the presence (or not) of a tax (variable TAXYes), whereas another is a dummy for the presence of basic income (variable RBYes), and finally we include a dummy for gender (variable SexMMale). The results from the logit regression are shown on Table 1. The negative sign of the variable TAXYes shows that the probability of replacement is lower when there is a tax. Another variable takes into account the difference in productivity between the robot and the human (variable I(ProdRob-Prod1)): its coefficient is positive, which means that the higher the productivity difference between robot and human, the higher the replacement probability. The ratio between the coefficients of the two variables is roughly 4.5, indicating the productivity differential necessary to compensate a unit tax for the use of a robot. The 95% confidence interval of the ratio of coefficients (found via bootstrapping) is (1.06, 8.18).

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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