What is the effect of robots and tools on employment and inequality? Using natural language processing and an instrumental variable approach, we discover that robots have led to a sizable decrease in the employment and wages of low-skilled workers in operational occupations. However, tools–machines that complement labor–have led to an equally large reinstatement of these workers, increasing their employment and wages. Using a quantitative model, we find that the lower prices of robots and tools over the last 20 years have reduced inequality and increased welfare without a significant effect on employment.