Working Paper: NBER ID: w28701
Authors: Pter Hudomiet; Robert J. Willis
Abstract: This paper analyzes how computerization affected the labor market outcomes of older workers between 1984 and 2017. Using the computerization supplements of the Current Population Survey (CPS) we show that different occupations were computerized at different times, older workers tended to start using computers with a delay compared to younger workers, but computer use within occupations converged to the same levels across age groups eventually. That is, there was a temporary knowledge gap between younger and older workers in most occupations. We estimate how this knowledge gap affected older workers’ labor market outcomes using data from the CPS and the Health and Retirement Study. Our models control for occupation and time fixed effects and in some models; we also control for full occupation-time interactions and use middle aged (age 40-49) workers as the control group. We find strong and robust negative effects of the knowledge gap on wages, and a large, temporary increase in transitions from work to non-participation, consistent with a model of creative destruction in which the computerization of jobs made older workers’ skills obsolete in birth cohorts that experienced computerization relatively late in their careers. We find larger effects on females and on middle-skilled workers.
Keywords: No keywords provided
JEL Codes: J14; J24; J26; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Knowledge gap in computer skills between younger and older workers (J21) | Older workers' wages (J39) |
| Knowledge gap in computer skills between younger and older workers (J21) | Transition from work to non-participation for older workers (J26) |
| Older workers who did not learn to use computers (J14) | Wage decreases (J31) |
| Older workers who did not learn to use computers (J14) | Diminished income (J17) |
| Older workers who did not learn to use computers (J14) | Decreased marginal value of work (J29) |
| Computerization (L86) | Skills of older workers rendered obsolete (J26) |
| Knowledge gap in computer skills (C89) | Shortened working lives of older workers (J26) |
| Knowledge gap in computer skills (C89) | Decreased wages for older workers (J39) |