Will you be replaced by an app?
Under the cost minimization rule, the firm only employs purely labour human labour when the marginal physical product (MPP) of having a machine in place of the human labour is very low. In this sense, it happens when a firm finds it more cost effective to have human labour i.e. the marginal physical product of the worker is higher than the marginal physical product of the machine. When the marginal cost of operating a machine exceeds the marginal revenue product of that same machine, then the firm will automatically utilize only human labour since the marginal cost will be lower and in this case the marginal physical product will be higher compared to that of a machine.
The cost minimization rule suggest that it would never come a time that the human labour will be automatically replaced by robotic inputs. The main reason is the relatively higher productivity of human labour compared to the robotic inputs. The human labour can undertake a number of operations at the same time, and this overshadows the productive ability of the robotic inputs. Also, the cost of hiring human labour is relatively cheaper than acquisition and maintenance of the robotic equipment. Therefore, the human labour at all times will be preferred to the robotic inputs if cost minimization is the utmost factor being considered. For this reason, the total replacement of human capital is something that is far from reality as the operation costs will be higher if the substitution is taken to be the organizations sole decision.
