Eckardt, Marcel Steffen (2022):
Minimum wages in an automating economy. (Publisher's Version)
In: Journal of Public Economic Theory, 24 (1), pp. 58-91. John Wiley & Sons, e-ISSN 1467-9779,
DOI: 10.26083/tuprints-00020978,
[Article]
Abstract
We explore the suitability of the minimum wage as a policy instrument for reducing emerging income inequality created by new technologies. For this, we implement a binding minimum wage in a task‐based framework, in which tasks are conducted by machines, low‐skill, and high‐skill workers. In this framework, an increasing minimum wage reduces the inequality between the low‐skill wage and the other factor prices, whereas the share of income of low‐skill workers in the national income is nonincreasing. Then, we analyze the impact of an automating economy along the extensive and intensive margins. In a setting with a minimum wage, it can be shown that automation at the extensive margin and the creation of new, labor‐intensive tasks do not increase the aggregate output in general, as the displacement of low‐skill workers counteracts the positive effects of cost‐savings. Finally, we highlight a potential trade‐off between less inequality of the factor prices and greater inequality of the income distribution when a minimum wage is introduced into an automating economy.
| Item Type: | Article |
|---|---|
| Erschienen: | 2022 |
| Creators: | Eckardt, Marcel Steffen |
| Origin: | Secondary publication DeepGreen |
| Status: | Publisher's Version |
| Title: | Minimum wages in an automating economy |
| Language: | English |
| Abstract: | We explore the suitability of the minimum wage as a policy instrument for reducing emerging income inequality created by new technologies. For this, we implement a binding minimum wage in a task‐based framework, in which tasks are conducted by machines, low‐skill, and high‐skill workers. In this framework, an increasing minimum wage reduces the inequality between the low‐skill wage and the other factor prices, whereas the share of income of low‐skill workers in the national income is nonincreasing. Then, we analyze the impact of an automating economy along the extensive and intensive margins. In a setting with a minimum wage, it can be shown that automation at the extensive margin and the creation of new, labor‐intensive tasks do not increase the aggregate output in general, as the displacement of low‐skill workers counteracts the positive effects of cost‐savings. Finally, we highlight a potential trade‐off between less inequality of the factor prices and greater inequality of the income distribution when a minimum wage is introduced into an automating economy. |
| Journal or Publication Title: | Journal of Public Economic Theory |
| Volume of the journal: | 24 |
| Issue Number: | 1 |
| Place of Publication: | Darmstadt |
| Publisher: | John Wiley & Sons |
| Uncontrolled Keywords: | automation, displacement effects, employment, inequality, labor demand, minimum wage, tasks, wages |
| Divisions: | 01 Department of Law and Economics 01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete 01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Fachgebiet Finanzwissenschaft und Wirtschaftspolitik |
| Date Deposited: | 11 Jul 2022 13:41 |
| DOI: | 10.26083/tuprints-00020978 |
| URL / URN: | https://tuprints.ulb.tu-darmstadt.de/20978 |
| URN: | urn:nbn:de:tuda-tuprints-209788 |
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