Minimum Wage Hikes and Technology Adoption: Evidence from U.S. Establishments

Journal of Financial and Quantitative Analysis (JFQA), forthcoming

Fox School of Business Research Paper

67 Pages Posted: 20 Sep 2019 Last revised: 29 Jan 2023

See all articles by Xin Dai

Xin Dai

Drexel University

Yue Qiu

Temple University

Date Written: September 11, 2019

Abstract

This paper studies the effects of state minimum wage increase on information technology (IT) adoption at the establishment level in the United States. Our results show that treatment establishments on average allocate between $10,328 and $66,808 more per year to their IT budgets during the first three years after experiencing significant state minimum wage increases. Additional evidence shows that state minimum wage increases on average lead to an economically small decrease in employment. The estimated employment effect is larger for establishments that have more incentives to automate labor. Our results suggest that establishments adopt technology to countervail increased labor costs.

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

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

Suggested Citation

Dai, Xin and Qiu, Yue, Minimum Wage Hikes and Technology Adoption: Evidence from U.S. Establishments (September 11, 2019). Journal of Financial and Quantitative Analysis (JFQA), forthcoming, Fox School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=3451663 or http://dx.doi.org/10.2139/ssrn.3451663

Xin Dai

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Yue Qiu (Contact Author)

Temple University ( email )

Philadelphia, PA 19122
United States

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