Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy

Angus Chu, Guido Cozzi, Yuichi Furukawa and Chih-Hsing Liao

No 201912, Working Papers from University of Liverpool, Department of Economics

Abstract: This study explores the effects of minimum wage on automation and innovation in a Schumpeterian growth model. We find that raising the minimum wage decreases the employment of low-skill workers and has ambiguous effects on innovation and automation. Specifically, if the elasticity of substitution between low-skill workers and high-skill workers in production is less (greater) than unity, then raising the minimum wage leads to an increase (a decrease) in automation and innovation. We also calibrate the model to aggregrate data to quantify the effects of minimum wage on the macroeconomy.

Keywords: minimum wage; unemployment; innovation; automation (search for similar items in EconPapers)
JEL-codes: E24 O30 O40 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-09
New Economics Papers: this item is included in nep-dge, nep-ino and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.liverpool.ac.uk/media/livacuk/schoolof ... n,and,Innovation.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:201912

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