We analyze for the first time the economic contributions of modern industrial robots, which are flexible, versatile, and autonomous machines. We use novel panel data on robot adoption within industries in seventeen countries from 1993 to 2007 and new instrumental variables that rely on robots’ comparative advantage in specific tasks. Our findings suggest that increased robot use contributed approximately 0.36 percentage points to annual labor productivity growth, while at the same time raising total factor productivity and lowering output prices. Our estimates also suggest that robots did not significantly reduce total employment, although they did reduce low-skilled workers’ employment share.

We test the hypothesis that information and communication technologies (ICT) polarize labor markets by increasing demand for the highly educated at the expense of the middle educated, with little effect on low-educated workers. Using data on the United States, Japan, and nine European countries from 1980 to 2004, we find that industries with faster ICT growth shifted demand from middle-educated workers to highly educated workers, consistent with ICT-based polarization. Trade openness is also associated with polarization, but this is not robust to controlling for R&D. Technologies account for up to a quarter of the growth in demand for highly educated workers.

The advent of the U.S. Interstate Highway System provides an interesting experiment, which I use to identify the labor market effects of reduced trade barriers. This highway network was designed to connect cities and border crossings and to serve national defense, and as an unintended consequence it crossed many rural counties. I find that these counties experienced an increase in trade-related activities, such as trucking and retail sales. By increasing trade, the highways raised the relative demand for skilled manufacturing workers in skill-abundant counties and reduced it elsewhere, consistent with the predictions of the Heckscher-Ohlin model.