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

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

MPRA Paper from University Library of Munich, Germany

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 aggregate 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 O3 O4 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/95824/1/MPRA_paper_95824.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/99335/1/MPRA_paper_99335.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/103974/1/MPRA_paper_103974.pdf revised version (application/pdf)

Related works:
Working Paper: Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy (2019)
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:pra:mprapa:95824

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().