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People versus Machines in the UK: Minimum Wages, Labor Reallocation and Automatable Jobs

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  • Lordan, Grace

    (London School of Economics)

Abstract

This study follows the Lordan and Neumark (2018) analysis for the US, and examines whether minimum wage increases affect employment opportunities in automatable jobs in the UK for low-skilled low-wage workers. Overall, I find that increasing the minimum wage decreases the share of automatable employment held by low-skilled low-wage workers, and increases the likelihood that workers in automatable jobs become disemployed. On aggregate the effect size is modest, but I also provide evidence that these effects are larger in more recent years. The study also highlights significant heterogeneity by industry and demographic group, including more substantive adverse effects for older low-skilled workers in manufacturing, as well as effects at the intensive margin.

Suggested Citation

  • Lordan, Grace, 2019. "People versus Machines in the UK: Minimum Wages, Labor Reallocation and Automatable Jobs," IZA Discussion Papers 12716, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12716
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    References listed on IDEAS

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    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    2. Grace Lordan & Jörn‐Steffen Pischke, 2022. "Does Rosie Like Riveting? Male and Female Occupational Choices," Economica, London School of Economics and Political Science, vol. 89(353), pages 110-130, January.
    3. Georg Graetz & Guy Michaels, 2017. "Is Modern Technology Responsible for Jobless Recoveries?," American Economic Review, American Economic Association, vol. 107(5), pages 168-173, May.
    4. Josten, Cecily & Lordan, Grace, 2019. "Robots at Work: Automatable and Non Automatable Jobs," IZA Discussion Papers 12520, Institute of Labor Economics (IZA).
    5. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    6. Lordan, Grace & Neumark, David, 2018. "People versus machines: The impact of minimum wages on automatable jobs," Labour Economics, Elsevier, vol. 52(C), pages 40-53.
    7. Daniel Aaronson & Brian J Phelan, 2019. "Wage Shocks and the Technological Substitution of Low‐wage Jobs," The Economic Journal, Royal Economic Society, vol. 129(617), pages 1-34.
    8. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    9. Megan Linde Leonard & T. D. Stanley & Hristos Doucouliagos, 2014. "Does the UK Minimum Wage Reduce Employment? A Meta-Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 499-520, September.
    10. Lordan, Grace, 2018. "Robots at work: a report on automatable and non-automatable employment shares in Europe," LSE Research Online Documents on Economics 90500, London School of Economics and Political Science, LSE Library.
    11. J. D. Tena & Jan Fidrmuc, 2013. "National minimum wage and employment of young workers in the UK," Discussion Papers 12, Central European Labour Studies Institute (CELSI).
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    Cited by:

    1. Lordan, Grace & Stringer, Eliza-Jane, 2022. "People versus machines: The impact of being in an automatable job on Australian worker’s mental health and life satisfaction," Economics & Human Biology, Elsevier, vol. 46(C).
    2. Elodie Andrieu & Malgorzata Kuczera, 2023. "Minimum Wage and Skills -Evidence from Job Vacancy Data," Working Papers 034, The Productivity Institute.
    3. Warn N. Lekfuangfu & Grace Lordan, 2023. "Documenting occupational sorting by gender in the UK across three cohorts: does a grand convergence rely on societal movements?," Empirical Economics, Springer, vol. 64(5), pages 2215-2256, May.
    4. Bürgisser, Reto, 2023. "Policy Responses to Technological Change in the Workplace," SocArXiv kwxn2, Center for Open Science.
    5. Koch, Andreas & Kirchmann, Andrea & Reiner, Marcel & Scheu, Tobias & Zühlke, Anne & Bonin, Holger, 2020. "Verhaltensmuster von Betrieben und Beschäftigten im Kontext des gesetzlichen Mindestlohns," IZA Research Reports 97, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    employment; unemployment; automation; robotics; technology; minimum wage;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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