NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Grace Lordan, David Neumark

NBER Working Paper No. 23667
Issued in August 2017, Revised in January 2018
NBER Program(s):Labor Studies, Productivity, Innovation, and Entrepreneurship

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.

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Document Object Identifier (DOI): 10.3386/w23667

Published: Grace Lordan & David Neumark, 2018. "People Versus Machines: The Impact of Minimum Wages on Automatable Jobs," Labour Economics, .

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