Abstract

Technological progress drives economic growth, but its benefits are not always equally shared. Institutions shape how automation impacts productivity and inequality. This paper empirically examines how collective bargaining agreements influence firms’ automation decisions and whether automation, in turn, affects firms’ participation in collective agreements. Using novel administrative data on Dutch firms and workers, we link detailed job-level collective bargaining coverage to firm-level automation expenditures. Our analysis yields two main findings. First, firms covered by firm-level collective bargaining invest more in automation than uncovered firms, suggesting that collective agreements create cost incentives for automation. Second, firms that were initially covered by a firm-level agreements tend to have smaller employment growth associated with automation expenditure. However, automation does not coincide with higher firms’ likelihood of exiting collective agreements. These findings highlight the role of collective agreements in shaping firms’ technological choices and employment dynamics.

Co-author: Emilie Rademakers