Multinationals, robots and the labor share

Fabrizio Leone

CEP Discussion Papers from Centre for Economic Performance, LSE

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.

Keywords: multinational enterprises; industrial robots; labour share; globalization; technological change (search for similar items in EconPapers)
Date: 2023-02-06
New Economics Papers: this item is included in nep-int and nep-tid
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Multinationals, Robots, and the Labor Share (2024)
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