Abstract
We study the role of industrial robots in shaping the divergence between labor productivity and wages across European countries from 1995 to 2020. To this end, we develop a tractable theoretical model in which robots substitute for routine labor. The model predicts a widening wage-productivity gap with increasing robot adoption. Using harmonized country-sector-year data, we find a robust positive association between robot intensity and the wage–productivity gap, particularly in the manufacturing sector. The relationship remains stable when controlling for outsourcing and capital intensity. Instrumental variable estimates based on external robot trends from the United States, South Korea, and New Zealand support a causal link between robot adoption and the wage–productivity wedge.
