Automation and collective agreements

Abstract In this paper, we empirically examine how collective bargaining agreements relate to firms' automation decisions and employment dynamics. Using novel administrative data on Dutch firms and workers, we link detailed information on collective bargaining coverage to automation expenditures at the firm level. 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 firm‐level collective agreements tend to experience smaller employment growth, which can contribute to the aggregate decline in collective agreement coverage.