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Make Yourselves Scarce: The Effect Of Demographic Change On The Relative Wages And Employment Rates Of Experienced Workers

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  • Michael J. Böhm
  • Christian Siegel

Abstract

This article 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.

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  • Michael J. Böhm & Christian Siegel, 2021. "Make Yourselves Scarce: The Effect Of Demographic Change On The Relative Wages And Employment Rates Of Experienced Workers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1537-1568, November.
    • Handle: RePEc:wly:iecrev:v:62:y:2021:i:4:p:1537-1568
    DOI: 10.1111/iere.12524
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    2. Chantal Pezold & Simon Jäger & Patrick Nüss, 2023. "Labor Market Tightness and Union Activity," NBER Working Papers 31988, National Bureau of Economic Research, Inc.
    3. Michael J Böhm & Terry Gregory & Pamela Qendrai & Christian Siegel, 2021. "Demographic change and regional labour markets," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(1), pages 113-131.
    4. Soojin Kim & Serena Rhee, 2022. "Understanding the Aggregate Effects of Disability Insurance," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 328-364, October.

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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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