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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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  • Böhm, M.
  • Siegel, Christian

Abstract

We argue that rising supply of experience not only reduces experienced workers’ relative wages but also their relative labor market participation. From a theoretical model we derive predictions which we quasi-experimentally investigate, using variation across U.S. local labor markets (LLMs) over the last decades and instrumenting experience supply by the LLMs’ age structures a decade earlier. We find that aging substantially reduces experienced workers’ relative wages and 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

  • Böhm, M. & Siegel, Christian, 2019. "Make yourselves scarce: The effect of demographic change on the relative wages and employment rates of experienced workers," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  • Handle: RePEc:unm:umaror:2019001
    DOI: 10.26481/umaror.2019001
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    Cited by:

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    2. 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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