From shares to machines: How common ownership drives automation

Joseph Emmens, Dennis Hutschenreiter, Stefano Manfredonia, Felix Noth and Tommaso Santini

No 23/2024, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This paper studies whether common ownership affects the direction of technological change. We develop a task-based model in which commonly owned firms internalize wage externalities from labor market rivals, increasing incentives to automate. We establish causality by exploiting institutional investor mergers in a dynamic DiD design, using U.S. data on institutional ownership, establishment-level employment, and automation patents. When institutional investor mergers increase common ownership among labor market rivals, the annual probability of those firms producing an automation patent increases by 3.79 percentage points and employment growth falls by 3.8 percentage points on average. Both effects disappear without labor market overlap.

Keywords: automation; common ownership; local labor markets; market power (search for similar items in EconPapers)
JEL-codes: G23 J42 O33 (search for similar items in EconPapers)
Date: 2026, Revised 2026
New Economics Papers: this item is included in nep-com, nep-lma and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:304457

DOI: 10.18717/dphn02-sw21

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