IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/15953.html
   My bibliography  Save this paper

Make Yourselves Scarce: The Effect of Demographic Change on the Relative Wages and Employment Rates of Experienced Workers

Author

Listed:
  • Siegel, Christian
  • Boehm, Michael

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.

Suggested Citation

  • Siegel, Christian & Boehm, Michael, 2021. "Make Yourselves Scarce: The Effect of Demographic Change on the Relative Wages and Employment Rates of Experienced Workers," CEPR Discussion Papers 15953, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15953
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP15953
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    2. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    3. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 59-118, Elsevier.
    4. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 705-746.
    5. James Liang & Hui Wang & Edward P. Lazear, 2018. "Demographics and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 140-196.
    6. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    7. Shoshana Grossbard (ed.), 2006. "Jacob Mincer A Pioneer of Modern Labor Economics," Springer Books, Springer, number 978-0-387-29175-8, December.
    8. Zsófia L. Bárány & Christian Siegel, 2018. "Job Polarization and Structural Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 57-89, January.
    9. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    10. Christian Dustmann & Uta Schönberg & Jan Stuhler, 2017. "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(1), pages 435-483.
    11. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 157-206.
    12. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    13. Neumark, David & Song, Joanne, 2013. "Do stronger age discrimination laws make Social Security reforms more effective?," Journal of Public Economics, Elsevier, vol. 108(C), pages 1-16.
    14. Gideon Bornstein, 2019. "Entry and Profits in an Aging Economy: The Role of Consumer Inertia," 2019 Meeting Papers 309, Society for Economic Dynamics.
    15. Fatih Karahan & Benjamin Pugsley & Ayşegül Şahin, 2024. "Demographic Origins of the Start-up Deficit," American Economic Review, American Economic Association, vol. 114(7), pages 1986-2023, July.
    16. Coen-Pirani, Daniele, 2010. "Understanding gross worker flows across U.S. states," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 769-784, October.
    17. Nicole Maestas & Kathleen J. Mullen & David Powell, 2023. "The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 306-332, April.
    18. Robert Shimer, 2001. "The Impact of Young Workers on the Aggregate Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 969-1007.
    19. Michael Peters & Conor Walsh, 2019. "Declining Dynamism, Increasing Markups and Missing Growth: The Role of the Labor Force," 2019 Meeting Papers 658, Society for Economic Dynamics.
    20. repec:spo:wpmain:info:hdl:2441/4t83lre9hm91sq006n4940n19s is not listed on IDEAS
    21. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 65-97, October.
    22. David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 31-68, July.
    23. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1055-1089.
    24. Francesco Caselli, 2014. "Experience-biased Technical Change," Discussion Papers 1517, Centre for Macroeconomics (CFM), revised Jul 2015.
    25. Courtney Coile, 2018. "Working Longer in the U.S.: Trends and Explanations," NBER Working Papers 24576, National Bureau of Economic Research, Inc.
    26. Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 289-318.
    27. Martha J. Bailey, 2010. ""Momma's Got the Pill": How Anthony Comstock and Griswold v. Connecticut Shaped US Childbearing," American Economic Review, American Economic Association, vol. 100(1), pages 98-129, March.
    28. Hugo Hopenhayn & Julian Neira & Rish Singhania, 2022. "From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share," Econometrica, Econometric Society, vol. 90(4), pages 1879-1914, July.
    29. Caselli, Francesco, 2015. "Experience-Biased Technical Change," CEPR Discussion Papers 10752, C.E.P.R. Discussion Papers.
    30. repec:hal:spmain:info:hdl:2441/4t83lre9hm91sq006n4940n19s is not listed on IDEAS
    31. Nicole Maestas & Julie Zissimopoulos, 2010. "How Longer Work Lives Ease the Crunch of Population Aging," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 139-160, Winter.
    32. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    33. David M. Blau & Ryan M. Goodstein, 2010. "Can Social Security Explain Trends in Labor Force Participation of Older Men in the United States?," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    34. Caselli, Francesco, 2015. "Experience-biased technical change," LSE Research Online Documents on Economics 86294, London School of Economics and Political Science, LSE Library.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weller, Jürgen, 2022. "Tendencias mundiales, pandemia de COVID-19 y desafíos de la inclusión laboral en América Latina y el Caribe," Documentos de Proyectos 48610, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rainer Kotschy & Uwe Sunde & Tommaso MonacelliManaging Editor, 2018. "Can education compensate the effect of population ageing on macroeconomic performance?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(96), pages 587-634.
    2. David Autor & Caroline Chin & Anna Salomons & Bryan Seegmiller, 2024. "New Frontiers: The Origins and Content of New Work, 1940–2018," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(3), pages 1399-1465.
    3. Orhun Sevinc, 2017. "Skill-Biased Technical Change and Labor Market Polarization: The Role of Skill Heterogeneity Within Occupations," Discussion Papers 1728, Centre for Macroeconomics (CFM).
    4. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    5. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    6. Dirk Antonczyk & Thomas DeLeire & Bernd Fitzenberger, 2018. "Polarization and Rising Wage Inequality: Comparing the U.S. and Germany," Econometrics, MDPI, vol. 6(2), pages 1-33, April.
    7. Ferreira, Francisco H. G. & Firpo, Sergio & Messina, Julián, 2017. "Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012," IZA Discussion Papers 10656, Institute of Labor Economics (IZA).
    8. Fitzenberger, Bernd & Kohn, Karsten, 2006. "Skill Wage Premia, Employment, and Cohort Effects: Are Workers in Germany All of the Same Type?," IZA Discussion Papers 2185, Institute of Labor Economics (IZA).
    9. Ariell Reshef, 2013. "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 312-331, April.
    10. Amaral, Ernesto F. L. & Rios-Neto, Eduardo L G & Potter, Joseph E, 2016. "The influence of internal migration on male earnings in Brazil, 1970–2000," OSF Preprints y8v2d_v1, Center for Open Science.
    11. Ernesto Amaral & Bernardo Queiroz & Júlia Calazans, 2015. "Demographic changes, educational improvements, and earnings in Brazil and Mexico," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
    12. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    13. Gallipoli, Giovanni & Makridis, Christos A., 2018. "Structural transformation and the rise of information technology," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 91-110.
    14. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U. S. Wage Inequality: Re-Assessing the Revisionists," Harvard Institute of Economic Research Working Papers 2095, Harvard - Institute of Economic Research.
    15. Paul Beaudry & David A. Green, 2005. "Changes in U.S. Wages, 19762000: Ongoing Skill Bias or Major Technological Change?," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 609-648, July.
    16. Wenchao Jin, 2022. "Occupational polarisation and endogenous task-biased technical change," Working Paper Series 0622, Department of Economics, University of Sussex Business School.
    17. Zeynep Elitas & Hakan Ercan & Semih Tumen, 2015. "Reassessing the trends in the relative supply of college-equivalent workers in the U.S.: a selection-correction approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 249-273, June.
    18. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    19. Borghans, Lex & ter Weel, Bas, 2007. "The diffusion of computers and the distribution of wages," European Economic Review, Elsevier, vol. 51(3), pages 715-748, April.
    20. Francisco Perez‐Arce & María J. Prados, 2021. "The Decline In The U.S. Labor Force Participation Rate: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 615-652, April.

    More about this item

    Keywords

    Demographic change; Employment of experienced workers; Return to experience;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:15953. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.