Institutions, Holdup, and Automation

Giorgio Presidente

Industrial and Corporate Change, 2023, vol. 32, issue 4, 831-847

Abstract: What drives investment in automation technologies? This paper documents a positive relationship between labor-friendly institutions and investment in industrial robots in a sample of advanced and developing economies. Institutions explain a substantial share of cross-country variation in automation. The relationship between institutions and robots is stronger in sunk cost-intensive industries, where producers are vulnerable to holdup. The result suggests that one reason for producers to invest in automation is to thwart rent appropriation by labor.

Date: 2023
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Related works:
Working Paper: Institutions, Holdup and Automation (2021)
Working Paper: Institutions, Holdup and Automation (2021)
Working Paper: Institutions, Holdup and Automation (2019)
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