Institutions, Holdup and Automation

This seminar will be conducted through Zoom. Please register to join this seminar. You will then receive an email with the dial in details. The seminar will not be recorded.


The meeting is set up so that you will join muted and without video. The presenter will start at 3pm and share their screen to show the presentation. There will be time at the end for a Q&A session. Please use the ‘raise your hand’ function and the presenter will unmute you. A video on how to do this is here.

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 more 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.
The paper can be found here: