Multinationals, Robots, and the Labor Share

Using a panel of Spanish manufacturing firms covering the 1990-2017 period, this paper shows that firms acquired by multinational enterprises experience a reduction in the labor share. Acquisitions drive changes in the production process of affiliates. One of the key aspects of this reorganization is the systematic adoption of robots, which allow affiliates to scale up production and expand into foreign markets but reallocate income away from labor. The results are robust to accounting for selection both into multinational ownership and robot adoption. The estimates imply that without multinationals, the decline in the manufacturing labor share over the sample period would have been 8% smaller. Multinational-induced robot adoption explains about 30% of the overall impact of multinational activity on the labor share. These findings shed new light on how globalization and technological change jointly contribute to the decline in the labor share.