Minimum Wage Hikes and Capital Deepening: Evidence from U.S. Establishments' IT Budget

48 Pages Posted: 20 Sep 2019 Last revised: 9 Oct 2021

See all articles by Yue Qiu

Yue Qiu

Temple University

Xin Dai

Drexel University

Date Written: September 11, 2019

Abstract

This paper studies the effects of state minimum wage increases on the adoption
of information technology (IT) at the establishment level in the United States. We
find that establishments on average allocate $57,549 more per year to IT budgets
during the three years after experiencing significant state minimum wage increases.
The effects are heterogeneous across industry, firm, or establishment characteristics.
Additional evidence suggests that significant state minimum wage increases lead to a
higher number of personal computers per employee and a lower employment growth
rate. Our results suggest that establishments change the mixture between capital and
labor in production as a response to increases in the wage floor.

Keywords: Minimum Wage, Labor Law, Corporate Investment, Technology

JEL Classification: G31, J38, J88, K31, O33

Suggested Citation

Qiu, Yue and Dai, Xin, Minimum Wage Hikes and Capital Deepening: Evidence from U.S. Establishments' IT Budget (September 11, 2019). Fox School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=3451663 or http://dx.doi.org/10.2139/ssrn.3451663

Yue Qiu (Contact Author)

Temple University ( email )

Philadelphia, PA 19122
United States

Xin Dai

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

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