Robotaxis reduce taxi drivers’ income

Abstract Technological progress drives productivity gains while also disrupting labor markets. The integration of artificial intelligence (AI) into emerging economies heightens concerns about job displacement, particularly among low- and middle-skilled workers. This study investigates the labor market impact in Wuhan, China, of Baidu’s Apollo Go, a robotaxi service. We collect over 200,000 daily observations of taxi drivers and their income, and we employ a Difference-in-Differences (DiD) approach to estimate the short run impact of the introduction of robotaxis on the income of traditional taxi drivers. We find that the introduction of robotaxis reduces traditional taxi drivers’ average daily income by 10.9%, likely due to the reduced demand for their services. In addition, we conduct a survey of these traditional taxi drivers, and we find that robotaxis increase working hours, increase job stress, decrease job satisfaction, and encourage these traditional taxi drivers to seek alternative employment. These results highlight the urgent need for policies to address the job disruptions caused by AI in emerging economies and beyond.