IDEAS home Printed from https://ideas.repec.org/p/udt/wpgobi/wp_gob_2026_06.html

Too Old to Adjust. Aging and the Speed of Automation Adoption

Author

Listed:
  • Eduardo Levy Yeyati

Abstract

We study how demographic composition changes the transition costs of rapid automation adoption in a speed–capacity model where displaced workers differ by age and the young share of the displacement pool declines over time. Older workers face higher discouragement hazards and lower retraining completion rates, so demographic aging deteriorates aggregate transition outcomes even when institutional capacity is unchanged—a demographic composition effect. This effect interacts with adoption speed through congestion: fast adoption in an older displacement pool is worse than the sum of its parts (supermodularity). We derive a demographic gradient in optimal adoption speed: the planner adopts faster when the displacement pool is younger. Numerically, in the calibrated region, this demographic gradient becomes steeper when aging is faster. We also identify a demographic buffer: a timing boundary beyond which earlier adoption may dominate delay, although the sufficient condition is quantitatively demanding under OECD-style calibrations. We derive six cross-country predictions and an explicit measurement strategy.

Suggested Citation

  • Eduardo Levy Yeyati, 2026. "Too Old to Adjust. Aging and the Speed of Automation Adoption," School of Government Working Papers wp_gob_2026_06, Universidad Torcuato Di Tella.
    • Handle: RePEc:udt:wpgobi:wp_gob_2026_06
    as

    Download full text from publisher

    File URL: https://repositorio.utdt.edu/handle/20.500.13098/14263
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Henry S. Farber, 2017. "Employment, Hours, and Earnings Consequences of Job Loss: US Evidence from the Displaced Workers Survey," Journal of Labor Economics, University of Chicago Press, vol. 35(S1), pages 235-272.
    Full references (including those not matched with items on IDEAS)

    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. Borowczyk-Martins, Daniel & Lalé, Etienne, 2020. "The ins and outs of involuntary part-time employment," Labour Economics, Elsevier, vol. 67(C).
    2. Chadi, Adrian & Hetschko, Clemens, 2025. "Income or leisure? On the hidden benefits of (un)employment," European Economic Review, Elsevier, vol. 171(C).
    3. Goos, Maarten & Rademakers, Emilie & Röttger, Ronja, 2021. "Routine-Biased technical change: Individual-Level evidence from a plant closure," Research Policy, Elsevier, vol. 50(7).
    4. Achim D. Schmillen, 2020. "Causes and Impacts of Job Displacements and Public Policy Responses," World Bank Publications - Reports 33720, The World Bank Group.
    5. Henry S. Farber & Chris M. Herbst & Dan Silverman & Till von Wachter, 2018. "Whom Do Employers Want? The Role of Recent Employment and Unemployment Status and Age," Working Papers 619, Princeton University, Department of Economics, Industrial Relations Section..
    6. Woodcock, Simon D., 2023. "The determinants of displaced workers’ wages: Sorting, matching, selection, and the Hartz reforms," Journal of Econometrics, Elsevier, vol. 233(2), pages 568-595.
    7. Afrouz Azadikhah Jahromi & Brantly Callaway, 2022. "Heterogeneous Effects of Job Displacement on Earnings," Empirical Economics, Springer, vol. 62(1), pages 213-245, January.
    8. Wen‐Jui Han & Jake Hart, 2021. "Job precarity and economic prospects during the COVID‐19 public health crisis," Social Science Quarterly, Southwestern Social Science Association, vol. 102(5), pages 2394-2411, September.
    9. Dobbelaere, Sabien & McCormack, Grace & Prinz, Daniel & Sóvágó, Sándor, 2025. "Firm consolidation and labor market outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 235(C).
    10. Kumari, Gunjan & Gupta, Neha & Narayanan, K., 2025. "Coping with labor market risk: Formal job loss and earnings dynamics in India," Economic Modelling, Elsevier, vol. 151(C).
    11. Herbert Schuetze & Brianna Perry, 2024. "Income and Labour Market Consequences of Business Failure," Department Discussion Papers 2407, Department of Economics, University of Victoria.
    12. Chiara Mussida & Luca Zanin, 2020. "I found a better job opportunity! Voluntary job mobility of employees and temporary contracts before and after the great recession in France, Italy and Spain," Empirical Economics, Springer, vol. 59(1), pages 47-98, July.
    13. Ines Helm & Alice Kuegler & Uta Schoenberg, 2023. "Displacement Effects in Manufacturing and Structural Change," RFBerlin Discussion Paper Series 2313, ROCKWOOL Foundation Berlin (RFBerlin).
    14. Ken Ueda, 2019. "How Do Local Labor Markets and Human Capital Affect Employment Outcomes after Job Loss?," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 548-572, October.
    15. Forsythe, Eliza, 2023. "Occupational Job Ladders within and between Firms," IZA Discussion Papers 16682, IZA Network @ LISER.
    16. Charles L. Baum, 2022. "Seven jobs in a lifetime? An analysis of employee tenure," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 543-567, April.
    17. Guler, Bulent & Taskin, Ahmet Ali, 2018. "Homeownership and unemployment: The effect of market size," Labour Economics, Elsevier, vol. 54(C), pages 191-209.
    18. Callaway, Brantly, 2021. "Bounds on distributional treatment effect parameters using panel data with an application on job displacement," Journal of Econometrics, Elsevier, vol. 222(2), pages 861-881.
    19. Groshen, Erica L. & Holzer, Harry J., 2019. "Improving Employment and Earnings in 21st Century Labor Markets: An Introduction," IZA Discussion Papers 12776, IZA Network @ LISER.
    20. Abhir Kulkarni & Barry T. Hirsch, 2021. "Revisiting Union Wage and Job Loss Effects Using the Displaced Worker Surveys," ILR Review, Cornell University, ILR School, vol. 74(4), pages 948-976, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    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:udt:wpgobi:wp_gob_2026_06. 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: Fiorela Navarro Duymovich (email available below). General contact details of provider: https://edirc.repec.org/data/geutdar.html .

    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.