Do Industrial Robots Affect Labour Investment Efficiency? Evidence From China

We examine the impact of industrial robots on the efficiency of firms' labour hiring decisions. Industrial robots, by providing scalability and flexibility in production, may lower labour adjustment costs and allow firms to adjust employment levels more efficiently in response to changing economic conditions. Consistent with this view, our analysis of 1845 Chinese listed firms from 2010 to 2019 shows that firms with greater exposure to industrial robots make more efficient labour investment decisions. This effect is more pronounced for financially constrained, labour‐intensive and non‐state‐owned firms. Further analysis reveals that the improvement in labour hiring efficiency is stronger in firms facing greater production uncertainty and possessing higher labour capabilities. These findings provide valuable insights for policymakers seeking to maximise the benefits of industrial robot adoption.