Robots and firm reshoring

This paper investigates the impact of firms' adoption of robots on reshoring, distinguishing between reshoring from developed (medium- and high-income) and developing (low-income) countries. It also examines whether reshoring occurs through the substitution of foreign suppliers with domestic ones or through in-house production. The study further analyses the effect of robotisation-induced reshoring on firms' employment. To estimate causal effects, we employ a combination of two-way fixed effects and Difference-in-Differences estimators with staggered adoption. The findings indicate that robot adoption leads to reshoring, primarily from developed countries, driven by the substitution of foreign sourcing with in-house production. Moreover, the results suggest that reshoring is associated with an increase in firm-level employment. However, when reshoring is coupled with robot adoption, the positive effect on employment is reduced, as robots are likely to contribute to the production of a portion of the reshored goods within the firm.