21 August 2019

Labor Market effects of Automation, Offshoring and Multinationals

Labor markets in Denmark and other advanced countries are being reshaped in fundamental ways by structural change. In particular two factors appear to play important roles: Automation and internationalization of firms. With this research project we addresses a number of themes related to how the Danish labor market is affected by this development:

1. Automation, Industrial Robots and the Labor Market

How do industrial robots affect workers in the labor market? Introduction of industrial robots in workplaces is first and foremost expected to displace workers from their original tasks, which may lead to job and earnings losses for workers. We do not have much evidence to document such adverse effects, but we examine in depth this mechanism for workers in Danish firms.

2. The Labor Share, Global Firms and New Technologies

From a broader perspective, the share of aggregate income going to labor is a crucial outcome that indicates the relative bargaining position of workers and capital owners in the economy. This so-called labor share has been in decline in many countries, and preliminary evidence suggests that the labor share has declined in large firms, whereas it seems to rise in smaller firms. The overall aim of this topic is to provide explanations for the causes of the shift in labor shares amongst firms. 

3. Multinationals and Economic Integration

One key and concrete source of economic integration of the Danish labor market to the global economy is through multinational enterprises (MNEs). In Denmark, MNEs employ around 40% of the private sector labor force, account for around 75% of the export value and almost 50% of the value added created in Denmark. MNEs are therefore large and increasingly important employers that link individual workers to the global economy. We examine if workers in large multinational corporations have better or worse working conditions and if jobs in these firms are more attractive than other jobs.

4. Education, Artificial Intelligence and Automation

When workers are displaced by new technologies they may find it harder to reattach to the labor market than other workers because their skill sets have become redundant. For this reason education is often highlighted as an important tool to combat job loss triggered by new technology. The aim of this topic is to investigate if education can deliver in terms of securing employment for workers in the Danish labor market.

Principal investigator: Jakob Roland Munch

Grant provider: Rockwool  Foundation

Project period: Spetember 2019 - August 2023