Foreign acquisitions, automation and labour share

Fabrizio Leone ()
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Fabrizio Leone: Bank of Italy

No 1539, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: How does a domestic firm's production process change when it is taken over by a foreign multinational? Using a panel of Spanish manufacturing firms covering the 1990-2017 period, this paper shows that acquired firms become significantly more likely to adopt industrial robots and that this shift towards automation reduces their labour share. To isolate these effects from selection into foreign ownership and robot use, the analysis combines nearest-neighbour matching with a staggered event-study design. Following an acquisition, affiliates' labour share falls by 6.5 percentage points (15 per cent relative to the sample mean), while their probability of adopting robots rises by 11 percentage points (30 per cent relative to the sample mean); robot adoption alone accounts for roughly one third of the acquisition-induced labour share decline. These patterns are consistent with the predictions of a model in which heterogeneous firms choose both their ownership structure and whether to adopt robots. They also remain robust after controlling for alternative explanations for the decline in the labour share, including factor-biased technical change, intangible capital and market power.

Keywords: foreign acquisitions; robots; automation; labour share (search for similar items in EconPapers)
JEL-codes: F23 F66 O33 (search for similar items in EconPapers)
Date: 2026-07
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