Untangling Employment, Automation Exposure and Aging: Evidence from a State and Industry Level Data

Abstract

Technological advancements and demographic shifts are reshaping labor markets worldwide, raising questions about their combined effects on employment and wages. Using data from U.S. Census Bureau and Bureau of Labor Statistics, this study examines how automation exposure (proxied by the probability of computerization) and demographic aging impact employment and wage growth. Employing panel data analysis, the findings reveal that automation exposure and an aging workforce significantly reduce employment growth, while wage impacts vary over time. Age-related cognitive abilities, both improving and declining with age, play an important role in influencing employment and wages differently across periods. Interaction effects show that stronger cognitive skills can offset automation exposure's impacts, boosting wages. These findings highlight the need for detailed analyses of age-related abilities to understand technology and aging's effects on labor markets.