Multinationals, robots and the labor share

Leone, Fabrizio (2023) Multinationals, robots and the labor share. CEP Discussion Papers (CEPDP1900). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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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.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2023 The Author(s)
Divisions:	Management
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes F - International Economics > F0 - General > F00 - General
Date Deposited:	23 Jan 2024 11:45
Last Modified:	14 Sep 2024 04:42
URI:	http://eprints.lse.ac.uk/id/eprint/121330

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