Unleashing the power of industrial robotics on firm productivity: Evidence from China.

• Robot adoption led to a 10 % increase in productivity within China's manufacturing firms. • The impact was more pronounced in the first two years following adoption. • The impact was likely to be greater for small-size firms. • Multi-functional robots had more pronounced effects than single-functional ones. • Industry-city robot exposure had positive spillover effects on non-adopting firms. This study investigates the effect of industrial robots on firm productivity in China. Employing propensity score matching (PSM) and staggered difference-in-difference (SDID) estimations, we find a statistically significant and positive casual effect of robot adoption on firm productivity at the 1 % significance level, leading to an approximate 10 % increase in total factor productivity (TFP) among manufacturing firms in China. The effect was most pronounced in the first two years following adoption but lost statistical significance from the third year onward. Additionally, we find that robot exposure, measured by both adoption rate and adoption intensity, had positive and statistically significant spillover effects on large-scale non-adopting firms within the same industry and city, leading to significant improvements in their TFP. Furthermore, the effect of robot adoption on firm productivity varied by robot type, firm size, and industry. Multi-functional robots (MFRs) exhibited a more substantial effect compared to singlefunctional robots (SFRs). The automotive, plastic/chemical, and metal industries had great productivity gains compared to other industries. These results withstand various rigorous robustness checks, reaffirming the validity and consistency of our findings. [ABSTRACT FROM AUTHOR]