Automation and Human Capital Adjustment: The Effect of Robots on College Enrollment

Abstract

This paper investigates the effect of robot adoption on the accumulation of human capital in the US. Using a simple theoretical framework, we illustrate how advances in automation are expanding the share of individuals who enroll in college, as college-educated workers are less exposed to the adverse effects of new technologies. We test this prediction empirically exploiting exogenous variation in the adoption of robots across local labor markets between 1993 and 2007. Our results show that robot exposure has increased substantially enrollment rates in post-secondary education institutions: for every three workers that have been displaced by automation, one individual enrolls in college. Most students are enrolling in two-year public institutions, since they are more accessible and rapidly provide workers with the necessary skills to be competitive in the labor market. There is no evidence, though, that automation is affecting students' commitment to complete their studies. Nevertheless, we observe a shift in completions towards more applied fields, such as computer science and engineering, which are likely to be the main source of job creation in the years to come due to their complementary role to the new technologies.