Automation, robots and wage inequality in Germany: A decomposition analysis

Abstract We conduct a decomposition analysis based on recentred influence function (RIF) regressions to disentangle the relative importance of automation and robotization for wage inequality in the manufacturing sector in Germany between 1996 and 2017. Our measure of automation threat combines occupation‐specific scores of automation risk with sector‐specific robot densities. We find that besides changes in the composition of individual characteristics, structural shifts among different automation threat groups are a non‐negligible factor associated with wage inequality between 1996 and 2017. Moreover, the increase in wage dispersion among the different automation threat groups has contributed significantly to higher wage inequality in the 1990s and 2000s.