Working Papers
The Effects of Minimum Wage on Employment and Low-Wage Routine Workers: Evidence from South Korea (submitted)
Are Minimum Wages and Wage Subsidies Substitutes or Complements? Evidence from the 1990s Policy Reforms (with Salvador Ortigueira) [PDF]
In this paper, we study the employment effects of the changes in the EITC and the minimum wage implemented between 1990 and 2001. In the 1990s, major changes were made in these two policies. The Omnibus Budget Reconciliation Act of 1993 (OBRA 93) substantially expanded the federal EITC. There were two consecutive increases in the federal minimum wage in 1996 and 1997. Also, an increasing number of states implemented or increased their own EITC programs and minimum wages. All these changes created a large variation across states in the changes of EITC generosity and minimum wages. We use continuous difference-in-differences to assess the employment effects of these changes. We find significant effects on employment, and interestingly, we find evidence of a positive interaction between the EITC and the minimum wage. Specifically, while we find that the minimum wage reduces employment, the positive interaction effect between the two policies alleviates such negative employment effects.
Automation and Job Displacement (With Salvador Ortigueira) [PDF]
In recent decades, automation technology has advanced rapidly. In this paper, we examine how automation affects the demand for unskilled and skilled labor using a task-based model. According to our analysis, the decline in capital price has opposing effects on labor demand. For both types of labor, the productivity effect boosts the demand, while the displacement effect reduces it. The latter effect arises because some task producers shift their factor of production to capital, displacing workers from their routine-intensive tasks. Additionally, the decline in capital price reduces the price of tasks produced by a combination of capital and skilled labor, which contributes to an increased demand for skilled labor. As a result, the demand for these two types of workers depends on which of these opposing forces dominates.