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Computerization, Obsolescence and the Length of Working Life
Péter Hudomiet1, Robert J Willis2
1RAND.
Labour Economics
|April 10, 2023
Summary
Computerization created a temporary skills gap for older workers, negatively impacting wages and increasing exits from employment. This effect was more pronounced for females and middle-skilled employees.
Area of Science:
- Economics
- Labor Economics
- Sociology of Work
Background:
- The rapid advancement of computer technology has significantly altered the labor market.
- Understanding the differential impact of technological change on various demographic groups is crucial for effective policy-making.
Purpose of the Study:
- To analyze the impact of computerization on the labor market outcomes of older workers in the United States.
- To investigate the role of the computerization knowledge gap in wage and employment transitions for older workers.
Main Methods:
- Utilized data from the Current Population Survey (CPS) computerization supplements and the Health and Retirement Study (HRS).
- Employed econometric models controlling for occupation and time fixed effects, and occupation-time interactions.
- Used middle-aged workers (40-49) as a control group to assess the impact on older workers.
Main Results:
- Identified a temporary knowledge gap in computer adoption between younger and older workers across occupations.
- Found robust negative effects of this knowledge gap on older workers' wages.
- Observed a significant, temporary increase in transitions from employment to non-participation for older workers.
Conclusions:
- Computerization led to skill obsolescence for older workers experiencing it later in their careers, consistent with creative destruction.
- The negative labor market impacts of computerization were more substantial for female and middle-skilled workers.
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