Working Paper: CEPR ID: DP15953
Authors: Michael Boehm; Christian Siegel
Abstract: This paper studies the impact of demographic change on experienced workers' relative wages and employment rates. We investigate empirical predictions from a framework of supply and demand for experience skill, using variation across U.S. local labor markets (LLMs) over the last decades and instrumenting experience skill supply by the LLMs' age structures a decade earlier. We find that aging substantially reduces experienced workers' relative wages and full-time employment rates, and also their labor market participation rates. Our results imply that the effect of demographic change on labor markets might be more severe than previously recognized, as it reaches beyond wages.
Keywords: demographic change; employment of experienced workers; return to experience
JEL Codes: J11; J21; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Demographic change (J11) | experienced workers' relative wages (J31) |
| Demographic change (J11) | full-time employment rates (J29) |
| Demographic change (J11) | labor market participation rates (J49) |
| Increase in relative experience skill in local market (F66) | experienced workers' relative wages (J31) |
| Increase in relative experience skill in local market (F66) | full-time employment rates (J29) |
| Increase in relative experience skill in local market (F66) | labor market participation rates (J49) |