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People versus Machines: The Impact of Minimum Wages on Automatable Jobs

Grace Lordan () and David Neumark ()
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David Neumark: University of California, Irvine

No 11297, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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 for 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 nonemployed or employed in worse jobs. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. We also find some evidence that the same changes improve job opportunities for higher-skilled workers. 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.

Keywords: minimum wage; employment; automation (search for similar items in EconPapers)
JEL-codes: J23 J38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm, nep-lma and nep-ltv
Date: 2018-01
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Related works:
Journal Article: People versus machines: The impact of minimum wages on automatable jobs (2018) Downloads
Working Paper: People versus machines: the impact of minimum wages on automatable jobs (2018) Downloads
Working Paper: People Versus Machines: The Impact of Minimum Wages on Automatable Jobs (2017) Downloads
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