Working Paper

The Evolution of Technological Substitution in Low-Wage Labor Markets

Abstract: This paper uses minimum wage hikes to evaluate the susceptibility of low-wage employment to technological substitution. We find that automation is accelerating and supplanting a broader set of low-wage routine jobs in the decade since the Financial Crisis. Simultaneously, low-wage interpersonal jobs are increasing and offsetting routine job loss. However, interpersonal job growth does not appear to be enough – as it was previous to the Financial Crisis – to fully offset the negative effects of automation on low-wage routine jobs. Employment losses are most evident among minority workers who experience outsized losses at routine-intensive jobs and smaller gains at interpersonal jobs.

Keywords: Low-wage automation; routine-biased technical change; minimum wages;

JEL Classification: J15; J21; J24; J38; O33;

https://doi.org/10.21033/wp-2020-16

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2020-07-14

Number: WP-2020-16

Related Works

• Working Paper Revision: The Evolution of Technological Substitution in Low-Wage Labor Markets