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Organized labor versus robots? Evidence from microdata

Author

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  • Findeisen, Sebastian
  • Dauth, Wolfgang
  • Schlenker, Oliver

Abstract

New technologies drive productivity growth, yet the distribution of gains may be unequal. We study how labor market institutions - specifically shop-floor worker representation - mediate the impact of automation. Combining German individual-level administrative records with plant-level data on industrial robot adoption, we find that works councils reduce the separation risk for incumbent workers during automation events. When labor markets are tight and replacement costs are high, incumbent workers become more valuable from the firm's perspective. Consequently, we document that the moderating effects of works councils diminish. Older workers, who face greater challenges reallocating to new employers, benefit the most from organized labor in terms of wages and employment. Finally, we observe that works councils do not hinder robot adoption; rather, they spur the use of higher-quality robots, encourage more worker training during robot adoption, and foster higher productivity growth thereafter.

Suggested Citation

  • Findeisen, Sebastian & Dauth, Wolfgang & Schlenker, Oliver, 2025. "Organized labor versus robots? Evidence from microdata," ZEW Discussion Papers 25-005, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:315741
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    More about this item

    Keywords

    automation; organized labor; work councils; labor market tightness; worker re-training;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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