Make yourselves scarce: The effect of demographic change on the relative wages and employment rates of experienced workers

M. Böhm, Christian Siegel

Research output: Working paperProfessional

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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.
Original languageEnglish
Place of PublicationMaastricht
PublisherResearch Centre for Education and the Labour Market
Number of pages62
DOIs
Publication statusPublished - 1 Apr 2019

Publication series

SeriesROA Research Memoranda
Number001

JEL classifications

  • j11 - Demographic Trends, Macroeconomic Effects, and Forecasts
  • j21 - Labor Force and Employment, Size, and Structure
  • j31 - "Wage Level and Structure; Wage Differentials"

Keywords

  • demographic change
  • employment of experienced workers
  • return to experience

Cite this

Böhm, M., & Siegel, C. (2019). Make yourselves scarce: The effect of demographic change on the relative wages and employment rates of experienced workers. Research Centre for Education and the Labour Market. ROA Research Memoranda, No. 001 https://doi.org/10.26481/umaror.2019001