Zero Hedge – New Study Says Robots Took All Of Detroit’s Jobs, Not Mexico
by Tyler Durden Mar 28, 2017 10:40 PM
As Trump gets ready to renegotiate NAFTA and impose tariffs on companies looking to outsource production to Mexico, a new study from MIT and Boston University suggests that industrial robots, not Mexico, may be the bigger factor contributing to the high levels on unemployment in the Midwest.
Entitled “Robots and Jobs: Evidence From US Labor Markets,” the authors of the study found that the addition of 1 robot per 1,000 workers results in an 18-35 bps reduction in the employment-to-population ratio and 25-50bps reduction in wages. Per Bloomberg:
One additional robot per thousand workers reduces the employment-to-population ratio by 0.18 percentage points to 0.34 percentage points and slashes wages by 0.25 percent to 0.5 percent, based on their analysis. To put that in context, the U.S. saw an increase of about one new industrial robot for every thousand workers between 1993 and 2007, based on the study.
“The employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education,” the authors write. “Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups.”
Worth noting: the authors estimate that robots may have increased the wage gap between the top 90th and bottom 10 percent by as much as 1 percentage point between 1990 and 2007. There’s also room for much broader robot adoption, which would make all of these effects much bigger.
Study – Robots and Jobs: Evidence from US Labor Markets
Daron Acemoglu, Pascual Restrepo
NBER Working Paper No. 23285
Issued in March 2017
As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages. We analyze the effect of the increase in industrial robot usage between 1990 and 2007 on US local labor markets. Using a model in which robots compete against human labor in the production of different tasks, we show that robots may reduce employment and wages, and that the local labor market effects of robots can be estimated by regressing the change in employment and wages on the exposure to robots in each local labor market—defined from the national penetration of robots into each industry and the local distribution of employment across industries. Using this approach, we estimate large and robust negative effects of robots on employment and wages across commuting zones. We bolster this evidence by showing that the commuting zones most exposed to robots in the post-1990 era do not exhibit any differential trends before 1990. The impact of robots is distinct from the impact of imports from China and Mexico, the decline of routine jobs, offshoring, other types of IT capital, and the total capital stock (in fact, exposure to robots is only weakly correlated with these other variables). According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.
Zero Hedge – The Robots Win: Blackrock Bets On Computers Over Human Stock Pickers, Fires Dozens
by Tyler Durden Mar 28, 2017 6:53 PM
As part of a massive overhaul that has been hinted at in recent months, and was unviled on Tuesday, BlackRock announced a reorganization of its actively managed equities business that will include job losses, pricing changes and a greater emphasis on computer models that inform investments.
BlackRock’s new strategy centers on a view that has been facilitated by the not so stealthy central bank takeover of capital markets in recent years, according to which it is difficult for human beings to beat the market with traditional bets on large U.S. stocks. As a result, at least seven stock portfolio managers are among several dozen employees who are expected to go as part of the revamp.
Instead of handing their funds to other humans for investing purposes, for the first time BlackRock’s Main Street customers will be able to buy lower-cost quantitative stock funds that rely on data and computer systems to make predictions, an investment option previously available only to large institutional investors. This option also virtually assures that the next market crash will be unlike anything ever seen. Some existing funds will merge, get new investment mandates or close.
For now the overhaul is only taking place at Blackrock, and represents the most dramatic attempt to rejuvenate a unit that has long lagged rivals in performance. Clients have pulled their money from the actively managed stock business in three of the past four years even as BlackRock’s total assets climbed to a record $5.1 trillion, according to the WSJ. BlackRock had $275.1 billion in active equity assets under management at the end of December, down from $317.3 billion three years earlier.