Institutions, Holdup and Automation

Giorgio Presidente

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

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 developing and advanced 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. As a consequence, policies aimed at supporting workers’ welfare by increasing their bargaining power might actually reduce their employment opportunities.

Keywords: Robots; Institutions; automation; holdup; unions; sunk costs; appropriability; bargaining; frictions; rents; technology adoption (search for similar items in EconPapers)
JEL-codes: J50 L16 O32 O33 O57 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-isf, nep-lab and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.econstor.eu/bitstream/10419/242475/1/IHA_nov2020.pdf (application/pdf)

Related works:
Journal Article: Institutions, Holdup, and Automation (2023)
Working Paper: Institutions, Holdup and Automation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:242475

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