From Shares to Machines: How Common Ownership Drives Automation

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

No 26113, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study whether common ownership affects the direction of technological change. We develop a task-based model with multiple local labor markets in which commonly owned firms internalize wage externalities from portfolio rivals when hiring from the same labor pool, 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 text-classified automation patents. Increases in common ownership among local labor-market rivals raise firms' automation propensity by 22.7 percentage points and reduce employment growth. The effect disappears when firms do not compete within labor markets.

Keywords: Common Ownership; Automation; Local Labor Markets; Market Power (search for similar items in EconPapers)
JEL-codes: G23 J42 O33 (search for similar items in EconPapers)
Date: 2026-04
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:crm:wpaper:26113

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