author: Eckardt, M. S. 
year: 2022
title: Minimum wages in an automating economy
publisher: Journal of public economic theory
uri: https://doi.org/10.1111/jpet.12528
pubtype: article
discipline: economics

country: United States
period:
maxlength: nr
targeting: explicit
group: low-skill workers
data: nr

design: simulation
method: task-based framework model
sample:
unit:
representativeness: national
causal: # 0 correlation / 1 causal

theory:
limitations:
observation:
  - intervention: minimum wage
    institutional: 1
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: income share (low-skill workers)
    findings: decreases if large displacement effects through machines/high-skill workers
    channels: displacement effects; changed demand; non-flexibility of wages
    direction: -1 # -1 neg / 0 none / 1 pos
    significance: # 0 nsg / 1 msg / 2 sg
  - intervention: minimum wage
    institutional: 1
    structural: 1
    agency: 0
    inequality: income
    type: 0 # 0 vertical / 1 horizontal
    indicator: 1 # 0 absolute / 1 relative
    measures: absolute wages (high-skill/low-skill)
    findings: inequality decreases 
    channels:
    direction: # -1 neg / 0 none / 1 pos
    significance: # 0 nsg / 1 msg / 2 sg

notes: only framework-based not on empirical data
annotation: |
  A study on the effects of minimum wage on income inequality, taking into account the effects of various kinds of automation within the economy.
  The study considers several types of automation, with automation on the extensive margin (automation of more tasks) leading to decreased wage inequality between low-skill and high-skill earners if it results in decreased overall outputs due to wage compression, and vice versa for increased total outputs.
  Automation on the intensive margin (increased productivity of automating existing tasks) has ambiguous effects on the employment share of low-skill workers (who are possibly displaced) and a higher minimum wage here decreases the inequality between low-skill wages and higher-skill wages.
  However, it may also result in a ripple effect which results in the overall share of income of low-skill workers not increasing, if more machines or high-skill workers displace them.
  Then, while the wage differences may decrease, the low-skill workers share of national income is identified as non-increasing and the share of low-skill employment could decrease.
  The effects on low-skill income share under a system of minimum wage are thus primarily dependent on the amount of low-skill job displacement, as well as the effects of the minimum wage on overall economic output in the first place.
  Ultimately, the author also suggests the institution of low-skill worker training programmes either targeting enhanced productivity for their existing tasks ('deepening skills') or enabling their capability for undertaking tasks previously only assigned to high-skill workers ('expanding skills') which would respectively counteract the negative automation effects on both margins.