Graduation Year

2025

Date of Submission

12-2024

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Andrew Finley

Abstract

This thesis explores the relationship between employment-related litigation and capital expenditures (CapEx) within firms, particularly focusing on the trade-off between labor and capital as automation becomes increasingly viable. It investigates whether legal challenges in the form of labor lawsuits prompt companies to increase investments in automation to mitigate future labor risks and costs related to employing human workers. The research includes analysis of the impact of litigation on CapEx across different time periods and industries. Results suggest a significant, though not unequivocally robust, positive correlation between litigation and CapEx increases. Notably, the impact of litigation on CapEx was more pronounced in recent years (2018–2024) as compared to earlier periods, reflecting the growing availability of automation technologies. The findings highlight observed shifts in capital investment expenditures as firms are increasingly able to replace labor with technology to reduce legal risks and lessen operational costs.

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