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Key Findings Details

Technological Progress and the Earnings of Older Workers
by Yuriy Gorodnichenko, John P. Laitner, Jae Song and Dmitriy Stolyarov
WP 2013-280
• We develop an earnings dynamics model that shows how technological progress affects workers’ earnings at different ages.
• Analyzing earnings data from 1950-2004, we find that earnings of younger workers rise commensurately with increases in productivity,  whereas, earnings of 60-year old workers grow only about 90% as fast as overall technological progress.
• However, we find that earnings growth from accumulating experience for older workers more than compensates for declines in ability to benefit from improvements in technology.
• Although increases in longevity presumably encourage workers to consider longer careers, declines in earning power likely have the opposite effect, especially during eras of rapid technological change.