Does a Minimum Wage Boost Automation and Outsourcing?

Does a Minimum Wage Boost Automation and Outsourcing?

The research project analyzed the long-run adjustments of firms and workers in response to the introduction of a minimum wage. The project was motivated by recent technological advances which allow firms to substitute labor with relatively cheaper capital or outsource production steps. Yet, little is still known how minimum wages affect firms’ capital intensity and organization of production, as well as the consequences for wages and employment. The research questions were:
(1) Do firms in covered industries become more capital-intensive or outsource production steps after the minimum wage introduction?
(2) Are these changes mostly among new firms or among incumbent firms in the covered industries?
(3) Are routine-task jobs substituted by non-routine task jobs?
(4) Are workers more likely to move from routine to non-routine jobs within the covered industries; or do they leave the minimum wage industries altogether?
(5) Which workers are most affected by these changes?

Project members

Terry Gregory

Terry Gregory

Coordinator
Senior Researcher

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Christina Gathmann

Christina Gathmann

Coordinator
Research Associate

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Kristina Zapp

Kristina Zapp

Researcher

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Contact

Senior Researcher, Dr. Terry Gregory
Telefon +49 (0)621 1235-131