Machines against Workers? Rethinking the Impact of Robots on Union Strength

• In Event: Federalism and Labor Politics

Abstract

While a common view is that labor-saving technological change weakens labor unions and thus increases economic and political inequality, we propose an alternative theory and test it using district-level data on robotization, union strength, and legislative votes in the United States. The adoption of industrial robots is a leading example of automation technology that substitutes tasks performed by labor with tasks performed by machines, and a booming literature in the social sciences is dedicated to untangling the economic and broader political consequences of robotization. However, the question of how robots shape the organization of workers is far from settled. To theoretically illustrate that machines do not necessarily undermine unions, we analyze a formal model in which a profit-maximizing firm bargains with a union over wages under the threat of firm relocation. Extending existing models, the firm decides whether to invest in robots and union leadership chooses its organization effort. The model illustrates that the adoption of robots can cause an increase in union strength because robots increase the firm’s cost of relocating and thus weakens its position at the bargaining table. We test implications of our model using data at the congressional district level from the US. In line with the theory, our semiparametric instrumental-variable estimates suggest that districts more exposed to industrial robots have higher union density in subsequent years. The pro-union effect of robots stems largely from the intensive rather than the extensive margin of unionization.

Author

• Daniel Stegmueller, Duke University