The Economics of Industrial Automation – Competition, Labor Market Power, and Political Participation

In an era of rapid advances in robotics and AI, it is crucial to understand the factors driving firms’ adoption of automation technologies and their societal repercussions. This dissertation provides new insights into firm-level automation dynamics and the political consequences of technological job loss.

The first chapter examines how product market competition affects automation investments of manufacturing exporters. Exploiting a tariff liberalization, the study reveals that increased competition may result in lower automation investments in less productive firms and higher investments by more productive firms, thereby increasing disparities between firms.

The second chapter explores automation in imperfect labor markets, presenting a theoretical model and empirical evidence that local labor markets exposed to industrial robots exhibit larger reductions in both employment and wages at higher levels of employer concentration.

The third chapter provides micro-evidence on the link between employers’ wage-setting power and automation investments. Estimating wage markdowns at manufacturing firms, I find that firms with greater labor market power invest more in machinery and are more likely to use robots.

The final chapter shows that areas with greater exposure to industrial robots have reduced voter turnout in U.S. federal elections, a trend not observed in counties facing import competition. Survey experiment results point to differences in voters’ beliefs about the government’s ability to manage technological change compared to import competition.