Robot adoption expands payroll and lifts non-owner labor share
Industrial robot adoption by Canadian private manufacturers increased non-owner worker payroll by 71 percent and raised the labor share of value added by 1.4 percentage points between 2002 and 2018, according to a Bank of Canada working paper.
More robots, higher non-owner pay
Canadian private manufacturers that adopted industrial robots expanded revenues, value added, and non-owner employment by 57 percent on average between 2002 and 2018.
Worker payroll grew by 71 percent, while average pay per employee rose by 9 percent following adoption.
Contrary to findings in European and US studies, the non-owner labor share of value added increased by 1.4 percentage points, whereas the owner income share declined by 1.7 percentage points.
Business owners captured gains primarily by taking higher employment income rather than paying out dividends, with total owner payout rising 34 percent among paying firms.
Separating owners from the shop floor
The study linked customs import filings with corporate tax Schedule 50 ownership records and individual tax slips across 406,710 private corporations.
In Canada, private business owners commonly withdraw profits as salary rather than dividends.
Conflating owner compensation with worker payroll understates non-owner employment growth by 11 percent and payroll growth by 13 percent, while artificially inflating measured value added per worker.
A blind spot in standard labor metrics
The paper exposes a major blind spot in empirical studies on automation and inequality.
By showing that owner salaries mask genuine worker gains, the authors challenge pessimistic narratives on technological displacement.
Yet idiosyncratic Canadian tax incentives prevent an easy generalization to public firms or foreign markets.