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Title: The Race between the Supply and Demand for Experience

Citation Type: Conference Paper

Publication Year: 2016

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Abstract: We propose a model in which rising supply of experience reduces experienced workers relative wages, and also negatively and systematically impacts their labor market participation. We then quasi-experimentally investigate the existence of these effects, using variation across US local labor markets (LLMs) over the last 50 years and instrumenting experience supply by the LLMs age structures a decade earlier. We find that aging drastically reduces the labor market participation of experienced relative to inexperienced workers; increasing their welfare-, disability-, and especially social security claims. Aging also reduces the (relative) migration of older workers into the aging LLMs. All of these reactions are mainly driven by low-skilled and low-earning workers. Our results imply that the effect of demographic change on the labor market is substantially more severe than previously recognized; it systematically impacts labor market outcomes beyond wages.

Url: http://conference.iza.org/conference_files/JuniorSenior_2016/9263.pdf

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Authors: Bohm, Michael J; Siegel, Christian

Conference Name: First IZA Junior/Senior Labor Symposium

Publisher Location: Bonn, Germany

Data Collections: IPUMS USA

Topics: Aging and Retirement, Labor Force and Occupational Structure

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