For decades, economists have studied the effects of the minimum wage on employees in the United States. These studies have largely focused on the employment effects for lowskilled workers – with the principal focus on teenagers. Overall, there is some controversy regarding whether disemployment effects exist, with some studies finding no effects, although with more – and more diverse kinds of studies – finding evidence of disemployment effects.
In this study, we explore the extent to which minimum wages induce substitution away from workers whose jobs are more easily automated. For instance, employers may substitute away from labor with technological innovations – such as supermarkets substituting self-service checkout for cashiers, and assembly lines in manufacturing plants substituting robotic arms for workers. At the same time, firms may hire other workers who perform new tasks that are complementary with the new technology. For example, a firm using more robots may hire individuals to service, troubleshoot, and maintain these new machines. It seems reasonable to expect that the workers more likely to be replaced following minimum wage increases are those who are low skilled, earning wages affected by increases in the minimum wage, while workers who “tend” the machines are higher skilled. This suggests that there is a potential for labor reallocation away from jobs that are automatable following increases in the minimum wage, that low-skilled workers in automatable jobs are particularly vulnerable to minimum wage increases, and that the net disemployment effects may be smaller than the gross effects that workers in automatable tasks experience.
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