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Multinationals, robots and the labor share

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  • Leone, Fabrizio

Abstract

Using a panel of Spanish manufacturing firms covering the 1990-2017 period, this paper shows that firms acquired by multinational enterprises experience a reduction in the labor share. Acquisitions drive significant changes in the production process of affiliates. One of the key aspects of this reorganization is the systematic adoption of robots, which allow affiliates to scale up production and expand into foreign markets but reallocate income away from labour. The results are supported by a model of automation choices with heterogeneous firms and are robust to accounting for selection into multinational ownership and robot adoption. Counterfactual results indicate that, in the absence of multinationals and robots, the manufacturing labor share would be at its level of two decades ago. These findings shed new light on how globalization and technological change jointly contribute to the decline in the labor share.

Suggested Citation

  • Leone, Fabrizio, 2023. "Multinationals, robots and the labor share," LSE Research Online Documents on Economics 121330, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121330
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    File URL: http://eprints.lse.ac.uk/121330/
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    References listed on IDEAS

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    More about this item

    Keywords

    multinational enterprises; industrial robots; labour share; globalization; technological change;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • F00 - International Economics - - General - - - General

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