Territorial market power as a source of inequalities in the automation era

Abstract

Automation is generally associated with a labour share decrease. This effect varies depending on the sectoral market concentration. This paper claims that also the presence of highly specialised and geographically clustered firms might shape the automation-labour share relationship. If monopolistic behaviours characterize the market structure, a territorial market power effect may take place, exerting a detrimental role on the labour share. Based on a large-scale analysis of the manufacturing sector in European NUTS2 regions between 2011-2019, the paper proves – through the estimation of a pooled OLS regression – the existence of a territorial market power effect.