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People versus machines: the impact of minimum wages on automatable

Lordan, Grace and Neumark, David (2018) People versus machines: the impact of minimum wages on automatable. Discussion Paper Series (11297). IZA Institute of Labor Economics, Bonn, Germany.

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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.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.iza.org/
Additional Information: © 2018 The Authors
Divisions: Social Policy
Centre for Economic Performance
LSE Health
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy
Sets: Departments > Social Policy
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > LSE Health
Date Deposited: 08 Mar 2018 14:36
Last Modified: 20 Aug 2019 18:06
URI: http://eprints.lse.ac.uk/id/eprint/87080

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