We study whether common ownership affects the direction of technological change. We develop a task-based model with multiple local labor markets in which commonly owned firms internalize wage externalities from portfolio rivals when hiring from the same labor pool, increasing incentives to automate. We establish causality by exploiting institutional investor mergers in a dynamic DiD design, using U.S. data on institutional ownership, establishment level employment, and text-classified automation patents. Increases in common ownership among local labor-market rivals raise firms’ automation propensity by 22.7 percentage points and reduce employment growth. The effect disappears when firms do not compete within labor markets.

We characterize AI automation as a continuum between crashing waves, in which capabilities jump abruptly across narrow task sets, and rising tides, in which capabilities improve continuously and broadly. Using evidence from more than 6,000 text-based, LLM-addressable tasks derived from the U.S. Department of Labor’s O*NET taxonomy and over 60,000 evaluations by experienced workers, we find little evidence of crashing waves (contrary to existing views). Instead, rising tides are the primary form of AI progress. AI performance is high and improving rapidly across many tasks. In 2024-Q2, models completed text-based tasks that take humans about 1.5 hours to complete with roughly 60% success, rising above 70% by 2025-Q3. If recent trends in AI capability growth persist, frontier LLMs will be able to complete most text-based tasks at minimally sufficient quality with 88%–97% success by 2030

We present causal evidence on the rent-sharing elasticity of German manufacturing firms. We develop a new firm-level Bartik instrument for firm rents that combines the firms’ predetermined energy input mix with national energy carrier price changes. Instrumental variable estimation yields a rent-sharing elasticity of approximately 0.20 implying that a 10% change in rents leads to a 2% change in wages. Rent-sharing induced by energy price variation is asymmetric and driven by energy price increases, such that, on average, workers do not benefit from energy price reductions but are harmed by price increases. Reduced-form evidence shows that a 10% increase in firm-level energy prices depresses firm-level wage growth by 0.34%.