Oxford Martin Working Paper Series on - Economic and Technological Change

The higher the sunk cost, the higher the rents workers can extract, the higher the incentives to invest in robots. [...] The top panel of Figure 2 depicts the relationship between the 1995-2015 change in the number of robots per thousand workers and the 1994 union membership rate.5 The figure shows that countries with higher union membership adopted a larger number of robot per worker over the period considered. [...] The central panel of Figure 2 displays the correlation between the change in robots’ adoption over the same period 5Each dot in the figure represents the country-average residual from a regression of long-run differences in robots per worker on the explanatory variables, after partialling out the impact of the 1993 stock of robots per worker, economic and demographic variables. [...] The first method is the calculation of partial R2.12 The results are presented in Table 2, which reports the number of observations and the partial R2 for the full and OECD sample, respectively.13 The partial R2 for demographic trends is 0.23 for the full sample and 0.33 for the OECD sample. [...] To mitigate concerns of reverse causality between strikes and investment in robots, strike activity is averaged over the five years preceding the beginning of the sample.18 The idea underlying the identification strategy is the following.