Strikes and Machines: Investments in the Norwegian inter-war period

To what extent do strike threats prompt firms to adopt capital-intensive methods to deter strikes, or labor-intensive strategies to maintain flexibility during work stoppages? We introduce a theoretical model that demonstrates how threats of industrial action influence capital investments through relative factor prices and the power dynamics between workers and employers. Using newly digitized data from 3,141 industrial conflicts and collective agreements in Norway during the interwar period, our findings indicate that strikes generally drive firms toward less capital-intensive technologies. This trend is particularly pronounced in conflicts resolved at the branch or national level, where strike threats may appear more exogenous to firms.