Computerization, Obsolescence, and the Length of Working Life

51 Pages Posted: 26 Apr 2021 Last revised: 20 Jul 2021

See all articles by Péter Hudomiet

Péter Hudomiet

RAND Corporation

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 2021

Abstract

This paper analyzes how computerization affected the labor market outcomes of older workers between 1984 and 2017. Using the computerization supplements of the Current Population Survey (CPS) we show that different occupations were computerized at different times, older workers tended to start using computers with a delay compared to younger workers, but computer use within occupations converged to the same levels across age groups eventually. That is, there was a temporary knowledge gap between younger and older workers in most occupations. We estimate how this knowledge gap affected older workers’ labor market outcomes using data from the CPS and the Health and Retirement Study. Our models control for occupation and time fixed effects and in some models; we also control for full occupation-time interactions and use middle aged (age 40-49) workers as the control group. We find strong and robust negative effects of the knowledge gap on wages, and a large, temporary increase in transitions from work to non-participation, consistent with a model of creative destruction in which the computerization of jobs made older workers’ skills obsolete in birth cohorts that experienced computerization relatively late in their careers. We find larger effects on females and on middle-skilled workers.

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Suggested Citation

Hudomiet, Péter and Willis, Robert J., Computerization, Obsolescence, and the Length of Working Life (April 2021). NBER Working Paper No. w28701, Available at SSRN: https://ssrn.com/abstract=3834141

Péter Hudomiet (Contact Author)

RAND Corporation ( email )

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Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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