Monopsony and Automation

Marina Chugunova, Klaus Keller, Jose Azar and Sampsa Samila
Additional contact information
Marina Chugunova: Max Planck Institute for Innovation and Competition
Klaus Keller: Max Planck Institute for Innovation and Competition
Jose Azar: University of Navarra, School of Economics and Business and IESE Business School
Sampsa Samila: IESE Business School, University of Navarra.

No 432, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We examine the impact of labor market power on firms' adoption of automation technologies. We develop a model that incorporates labor market power into the task-based theory of automation. We show that, due to higher marginal cost of labor, monopsonistic firms have stronger incentives to automate than wage-taking firms, which could amplify or mitigate the negative employment effects of automation. Using data from US commuting zones, our results show that commuting zones that are more exposed to industrial robots exhibit considerably larger reductions in both employment and wages when their labor markets demonstrate higher levels of concentration.

Keywords: automation; employment; labor market concentration; industrial robots; wage setting (search for similar items in EconPapers)
JEL-codes: J23 J30 J42 L11 O33 (search for similar items in EconPapers)
Date: 2023-10-17
New Economics Papers: this item is included in nep-com, nep-lma and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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