Minimum Wage Hikes and Capital Deepening: Evidence from U.S. Establishments' IT Budget
42 Pages Posted: 20 Sep 2019 Last revised: 21 Jun 2021
Date Written: September 11, 2019
This paper studies the effects of state minimum wage increases on information technology (IT) budget at the establishment level in the United States. We find establishments in states that experience significant minimum wage increases on average allocate $62,342 more per year to IT budgets. The effects are heterogeneous across industry, firm, or establishment characteristics. Additional evidence suggests that significant state minimum wage increases lead to higher IT capital. Our results suggest that establishments change production technology in response to increases in the wage floor.
Keywords: Minimum Wage, Labor Law, Corporate Investment, Technology
JEL Classification: G31, J38, J88, K31, O33
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