Organized labor versus robots? Evidence from microdata


Findeisen, Sebastian ; Dauth, Wolfgang ; Schlenker, Oliver


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URN: urn:nbn:de:bsz:180-madoc-696356
Document Type: Working paper
Year of publication: 2025
The title of a journal, publication series: ZEW Discussion Papers
Volume: 25-005
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: J20 , J30 , J53 , O33,
Keywords (English): automation , organized labor , work councils , labor market tightness , worker re-training
Abstract: New technologies drive productivity growth, yet the distribution of gains may be unequal. We study how labor market institutions – specifically shop-floor worker representation – mediate the impact of automation. Combining German individual-level administrative records with plant-level data on industrial robot adoption, we find that works councils reduce the separation risk for incumbent workers during automation events. When labor markets are tight and replacement costs are high, incumbent workers become more valuable from the firm’s perspective. Consequently, we document that the moderating effects of works councils diminish. Older workers, who face greater challenges reallocating to new employers, benefit the most from organized labor in terms of wages and employment. Finally, we observe that works councils do not hinder robot adoption; rather, they spur the use of higher-quality robots, encourage more worker training during robot adoption, and foster higher productivity growth thereafter.




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