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Labor market policies intended to protect trade secrets and spur research and development may instead limit late-career wages and encourage firms to replace human labor with machines and other automation equipment, according to a study in the journal Labour Economics by researchers at Penn State, the Federal Reserve Bank of Cleveland and Colorado State University.

"The policy is sold as protecting innovation, but we don't see that in the data," said study author Bharadwaj Kannan, associate clinical professor of finance at Penn State's Smeal College of Business.…