Minimum Wage Hikes and Technology Adoption: Evidence from U.S. Establishments

Abstract

This paper studies the effects of state minimum wage increases on the adoption
of information technology (IT) at the establishment level in the United States. We
find that establishments on average allocate $57,549 more per year to IT budgets
during the three years after experiencing significant state minimum wage increases.
The effects are heterogeneous across industry, firm, or establishment characteristics.
Additional evidence suggests that significant state minimum wage increases lead to a
higher number of personal computers per employee and a lower employment growth
rate. Our results suggest that establishments change the mixture between capital and
labor in production as a response to increases in the wage floor.

Keywords: Minimum Wage, Labor Law, Corporate Investment, Technology

JEL Classification: G31, J38, J88, K31, O33