Automation and Inequality: How Robots Shift Income Between Workers and Owners

We estimate the direct effects of robot adoption on the within-firm distribution of income between non-owner workers and individual owners in Canadian private corporations. We link firm-level data on industrial robot imports to matched owner-worker-firm data that identify owners of private corporations, their employment income, and firms’ dividend payments to owners and retained earnings. Robot adoption is associated with sizable increases in firm revenues, value added, and non-owner employment and payroll. Unlike several studies of robot adoption in other settings, we find little evidence that adoption reduces adopters’ conventionally measured labor share of value added; if anything, the non-owner labor share increases slightly, while the total owner income share does not rise. Owners nevertheless benefit from adoption, but primarily through increases in employment income. These results underscore the importance of distinguishing owner employment income from ordinary worker payroll for measuring how firm-level technology shocks affect workers, owners, and the distribution of income within firms.