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Working Paper, No. 2020-16, July 2020 Crossref
The Evolution of Technological Substitution in Low-Wage Labor Markets

This paper uses minimum wage hikes to evaluate the susceptibility of low-wage employment to technological substitution. We find that automation is accelerating and supplanting a broader set of low-wage routine jobs in the decade since the Financial Crisis. Simultaneously, low-wage interpersonal jobs are increasing and offsetting routine job loss. However, interpersonal job growth does not appear to be enough – as it was previous to the Financial Crisis – to fully offset the negative effects of automation on low-wage routine jobs. Employment losses are most evident among minority workers who experience outsized losses at routine-intensive jobs and smaller gains at interpersonal jobs.


Working papers are not edited, and all opinions and errors are the responsibility of the author(s). The views expressed do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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