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Technological Progress and Worker Productivity at Different Ages

  • John Laitner

    (University of Michigan)

  • Dmitriy Stolyarov

    (University of Michigan)

Economists have long thought of technological progress as a primary determinant of rising living standards over time. One might think of technological progress as increasing the “effectiveness” of labor, thereby raising the amount of output that each unit of labor can produce. The purpose of this paper is to ask whether, as an empirical matter, technological progress increases the productivity of workers evenly, or whether it augments the effectiveness of young workers the most. As low birthrates and increases in longevity lead to an “aging” of the population, the productivity of older workers relative to younger workers is likely to become an ever more important issue. Analyzing data from the decennial Censuses and annual data from the Current Population Survey, this paper draws three tentative conclusions. First, we find that the “aging” of the U.S. work force seems more likely to increase aggregate productivity – by raising the proportion of laborers with sizable accumulations of human capital from experience – than to decrease it – by slowing the adoption rate for innovations. Our preliminary estimates imply that the latter effect is of modest magnitude. Second, since our preliminary estimates point to “general” rather than “specific” technological progress, each household faces a problem of having to predict the course of technological progress over its life span. This means that households face more risk than otherwise, and it complicates the specification of the life-cycle model that analysts should employ. Third, when we disaggregate across education groups, the groups show quite unequal benefits from technological progress after 1980, and this may lead to further challenges in modeling household behavior.

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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp107.

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Length: 26 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:mrr:papers:wp107
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  1. Axel Börsch-Supan, 2004. "Global Aging: Issues, Answers, More Questions," MEA discussion paper series 04055, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  3. John Laitner, 2000. "Earnings within Education Groups and Overall Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 807-832, August.
  4. Johnson, William R, 1980. "Vintage Effects in the Earnings of White American Men," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 399-407, August.
  5. Axel Börsch-Supan, 2004. "Global Aging: Issues, Answers, More Questions," Working Papers wp084, University of Michigan, Michigan Retirement Research Center.
  6. Burmeister, Edwin & Dobell, Rodney, 1969. "Disembodied technological change with several factors," Journal of Economic Theory, Elsevier, vol. 1(1), pages 1-8, June.
  7. Modigliani, Franco, 1985. "Life Cycle, Individual Thrift and the Wealth of Nations," Nobel Prize in Economics documents 1985-1, Nobel Prize Committee.
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