Routine-biased technological change and robotisation continue to change the political economy of labour markets. High-routine manufacturing occupations, in particular, have experienced varied employment and earnings trends across countries. In this paper, I investigate whether robotisation and labour market institutions have (heterogeneous) effects on the wage premium for manufacturing workers in a sample of 20 OECD countries between 1993 and 2016.

I pursue three related arguments. The productivity argument states that the manufacturing wage premium is a function of relative labour productivity in manufacturing, which is assumed to increase with robotisation. The power resource argument posits that differential exposure to inclusive labour market institutions alters the relative bargaining power of occupational groups, with higher unionisation and stricter employment protection benefitting manufacturing workers. Since these two arguments have not yet been studied jointly, I also investigate whether institutions moderate the impact of robotisation on wages, and thus close another gap in the literature.

I find evidence in favour of the productivity and institutional arguments in descriptive analyses; however, only employment protection significantly affects the manufacturing wage premium in panel regression analyses. Moreover, only employment protection, but not union density, moderates this relationship.

To my knowledge, this is the first study that jointly analyses the impact of robotisation and labour market institutions on the wages of manufacturing workers relative to other occupational groups. I find a limited role for robotisation and highlight the impact of institutions on occupational wage hierarchies. This has important implications for the political economy of labour market regulation.