The research project analyzes the long-run adjustments of firms and workers in response to the introduction of a minimum wage. The project is 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 are:
(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?