People versus machines: the impact of minimum wages on automatable

Grace Lordan and David Neumark

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers from whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become unemployed. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.

JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-08
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (13)

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