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From Shares to Machines: How Common Ownership Drives Automation

Author

Listed:
  • Joseph Emmens
  • Dennis C. Hutschenreiter
  • Stefano Manfredonia
  • Felix Noth
  • Tommaso Santini

Abstract

We study whether common ownership affects the direction of technological change. We develop a task-based model with multiple local labor markets in which commonly owned firms internalize wage externalities from portfolio rivals when hiring from the same labor pool, increasing incentives to automate. We establish causality by exploiting institutional investor mergers in a dynamic DiD design, using U.S. data on institutional ownership, establishment level employment, and text-classified automation patents. Increases in common ownership among local labor-market rivals raise firms' automation propensity by 22.7 percentage points and reduce employment growth. The effect disappears when firms do not compete within labor markets.

Suggested Citation

  • Joseph Emmens & Dennis C. Hutschenreiter & Stefano Manfredonia & Felix Noth & Tommaso Santini, 2026. "From Shares to Machines: How Common Ownership Drives Automation," RFBerlin Discussion Paper Series 26113, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26113
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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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