WAGE SHOCKS AND THE TECHNOLOGICAL SUBSTITUTION OF LOW-WAGE JOBS

We extend the task based empirical framework used in the job polarisation literature to analyse the susceptibility of low-wage employment to technological substitution. We find that increases in the cost of low-wage labour, via minimum wage hikes, lead to relative employment declines at cognitively routine Occupations but not manually-routine or non routine low-wage occupations. This suggests that low-wage routine cognitive tasks are susceptible to technological substitution. While the short-run employment consequence of this reshuffling on individual workers appears to be economically small, due to concurrent employment growth in other low-wage jobs, workers previously employed in cognitively routine jobs experience relative wage losses.