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Source: Antoine Dechezleprêtre, et al., “Induced Automation: Evidence from Firm-level Patent Data,” University of Zurich, Department of Economics, Working Paper No. 384, April 2021.
Commentary: There have been a number of studies showing that an increase in wages for low-skill workers boosts automation, which stands to reason. In a new study of 41 nations between 1997 and 2011, researchers from the University of Zurich find that when wages increase for low-skilled jobs, so too does automation innovation (as measured by patents). As such, if the United States wants to be globally competitive in automation-related technologies, especially vis-à-vis China, then policies to ensure higher wages for low-skilled workers are key, including expansionary fiscal and monetary policy for full employment, stronger limits on low-skill immigration, and a higher minimum wage.