The impact of technological age - An empirical analysis of technological change induced human capital depreciation and its influence on wages and the likelihood to leave an occupation

Abstract

Abstract This analysis establishes the novel concept of technological age as a meas-ure of occupation specific technologically induced human capital depreciation. The hypothesis is that technological age makes workers less efficient in their adoption of new technologies and leads to lower wages or workers leaving their occupations. Therefore, the analysis estimates the impact of technological age on wages and on the probability that workers leave their occupations. To measure technological age, the analysis uses the “Employment Survey of the Working Population on Qualifica-tion and Working conditions in Germany” dataset to estimate technological change for 28 occupations in the timeframe 1979-2006. This occupation specific technologi-cal change is then used to estimate an individual technological age for 971,510 in-dividuals in the dataset “Sample of Integrated Labor Market Biographies Descrip-tion.” As hypothesized, technological age has a negative and significant impact on wages in most occupations during the sample period. Alas, when looking at sub-sample estimations, it becomes clear that technological age has a positive impact on wages in the timeframe from 1979-1999 and that technological age only has a nega-tive impact on wages in the timeframe from 2000-2006. Furthermore, technological age makes workers more likely to leave their occupations in most occupations dur-ing the sample period. Yet again, when looking at sub sample periods, technological age makes workers more likely to leave their occupations during the years 1979-1999 and less likely during the years 2000-2006. Technological age surprisingly al-ways has a more negative impact in less technologically intensive occupations. Workers in less technologically intensive occupations are affected more by the wage effect of technological age and workers in less technologically intensive occupa-tions are more likely to leave their occupations due to technological age. This is true for the entire sample period as well as the sub sample timeframes.