Robot Penetration and Asymmetric Cost Behavior

This paper contributes to the contentious debate on the implications of robot penetration by examining corporate resource adjustments through the lens of cost behavior. We document robust and causal evidence that firms in industries more exposed to robots exhibit a lower asymmetry in operating costs. The penetration of robots in the workplace decreases cost stickiness to a greater extent when the local area has more robot integrators, when jobs in the firm’s industry are more susceptible to automation, when the firm is younger, and when product market competition is more intense. We also find that the effect of robot penetration on cost asymmetry is weaker in firms facing stronger unions and higher firing costs. Overall, our results suggest that robotization improves flexibility in cost adjustments and accelerates downsizing during economic slumps