Do Robots Hurt Humans? Evidence from the Dark Side of Workplace Automation

We investigate the dark side of utilizing robotic capital to replace human capital in U.S. public firms and find that public firms that are more capable of replacing human capital with automated capital have surprisingly poor record of workplace safety as well as overall poor performance on employee-related corporate social responsibility (CSR). Our results remain robust after addressing endogeneity concern. We further the negative link is stronger for firms adopting more aggressive financial policies and incurring higher labor related costs. Finally, our analysis unveils that the compromise on employees’ wellbeing among firms which are highly subjective to workplace automation comes at a cost of lower firm performance. Overall, we document that the trend of workplace automation can create a moral hazard: such firms expect to increase the productivity with automated capital whilst attach less attention on current employees’ welfare