The Impact of Technological Change on Older Workers Evidence from Data on Computers

Leora Friedberg

Abstract

This paper explores the impact on older workers of new technologies that change skill requirements. Older workers, with older skills and less skills am prime-age workers, will suffer in comparison. Furthermore, if skill acquisition is costly, older workers have less incentive to acquire new skills because they have a shorter time horizon until retirement to recoup the investment. Some surveys now report data on computer use by workers. The age patterns suggest that older workers use computers less not simply because they are old or many years out of school, but because they are nearing retirement. In turn, we might expect older workers who do not use computers to retire sooner because they are at a growing disadvantage in the labor market; and also because their lack of skills signals early retirement intentions. Non-computer users in the Health and Retirement Survey were 28% more likely to leave work between 1992 and 1994. Instrumenting for individual computer use with average computer use of prime-age workers in the same type of job, and including numerous controls for individual and job characteristics from the HRS, suggests that computer use lowers the retirement probability by 30%.

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