The Impact of Minimum Wage Shock on Robot Adaption in Turkey

Yusuf Emre Akgunduz (), Ugur Aytun () and Seyit Cilasun ()
Additional contact information
Yusuf Emre Akgunduz: Sabanci University
Ugur Aytun: Dumlupinar University
Seyit Cilasun: TED University & ERF

No 1768, Working Papers from Economic Research Forum

Abstract: In recent years, the surge in industrial robot usage has been prominently driven by labor costs. However, the impact of cost-related shocks on firms’ decisions to integrate robots has received limited attention. This study investigates how manufacturing firms in Turkey reacted to a sudden 33.5% increase in the minimum wage in 2016 regarding their robot importation decisions. Utilizing administrative employer-employee data, firm-level trade, and balance sheet data, and employing a difference-in-differences approach with a continuous treatment, we find that the minimum wage shock overall does not significantly affect robot adoption. Yet, this effect varies by firm size; medium-sized firms show a positive and significant propensity to adopt robots, which is even more pronounced in large firms. Quantitatively, a one-point increase in the share of minimum wage employment in total employment leads to a 0.4% increase in the probability of importing robots for medium firms and a 2.7% increase for large firms. These findings are consistent across both extensive and intensive margins of robot adoption. Firms with a high intensity of blue-collar and routine task workers are particularly more likely to import robot in response to a minimum wage shock. Moreover, competitive pressures in the industries also spur firms towards robot adoption

Pages: 19
Date: 2024-12-20, Revised 2024-12-20
References: Add references at CitEc
Citations:

Published by The Economic Research Forum (ERF)

Downloads: (external link)
https://erf.org.eg/publications/the-impact-of-mini ... daption-in-turkey-2/ (application/pdf)
https://url-shortener.me/ESC (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:erg:wpaper:1768

Access Statistics for this paper

More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Namees Nabeel ().