phasing out of the labor market

Phasing out of the labor market


Lucas van der Velde

GRAPEGroup for Research in APplied Economics

August 2016European Association of Comparative Economic Studies


Motivation

Introduction

Goal: study task content of jobs → retirement patterns.

Hypothesis: Routine Task Intensity (RTI) reduces laborsupply.

Intensive margin → Older people in routine jobs work lesshours.Extensive margin → Older people in routine jobs retire sooner.


Motivation

Task content and old age workers

Human capital story

Selective entries into growing occupations by younger workers.(Autor and Dorn 2009, Lewandowski et al. 2015)

Contribution

Look at disaggregate dataFocus on exits rather than entries

Why tasks might matter?

Monotonous/tedious chores and retirement.(Melamed et al. 1995, Blekesaune and Solem 2005, Loukidou et al.2009, Dal Bianco et al. 2015)

Shifts in the demand for tasks.


Task content of occupations

What is a task?

A task is a unit of activity that produces output.(Acemoglu and Autor 2011)

Classification of tasks

Routine Non-routineCognitive Proofreading Interpreting data

Interpersonal - NegotiatingManual Adjusting screws Repairing, cleaning.

Notes: Classification from Autor et al. (2003). Other authors introduced small changes in this categorization, seeGoos and Manning (2007), Frey and Osborne (2013), Marcolin et al. (2016)


Task content of occupations

Technological progress, changes in demand and ...

Fall in the demand for tasksAutor et al. (2003), David H. Autor (2002), Goos and Manning (2007), Goos

et al. (2009), Ikenaga (2009), Acemoglu and Autor (2011), Autor and Dorn

(2013), Michaels et al. (2014), Cortes (2016).

Changes within occupationsAutor et al. (2003), Spitz-Oener (2006), Autor and Handel (2013), Akcomak

et al. (2015), De la Rica and Gortazar (2016), Pikos and Thomsen (2016)

Competing theoriesBlinder (2009), Beaudry et al. (2014, 2016)


Data description

Operationalizing the variables

Derived from O*NET following Acemoglu and Autor (2011) withemployment weights from EU-LFS.

Occupations defined by ISCO 88 at 3-digit level.

For example

Task Variables

- Analyzing data / informationNon-Routine Cognitive - Thinking Creatively

- Interpreting information for others

Routine Task Intensity Index: Sum of routine tasks minusnon-routine tasks. (Autor and Dorn 2013, Goos et al. 2014)


Data description

Operationalizing the variables−

4−

20

24

6R

TI i

ndex

0 20 40 60 80 100Skill percentile

Figure: Germany (West)−

20

24

6R

TI i

ndex

0 20 40 60 80 100Skill percentile

Figure: Great Britain

ρ = .8 with Goos et al. (2014)


Data description

Databases

GSOEP (DE) GSOEP (EG) BHPSPeriod 1984-2014 1990-2014 1991-2007Number obs. 25 ths + 10 ths + 25 ths +Unique obs. 5 ths + 2 ths 5 thsHours worked 37.49 41.39 33.82Unique failures 720 454 645Female .46 .48 .48Tertiary educated .24 .33 .11Share services .68 .67 .73ISCO88¡4 .49 .44 .39

Notes: Sample descriptors includeonly individuals between 50 and 60 who worked for at least a year in those tenyears. Household with migrants and self employed individuals not included in the sample


Data description

Changes in Labor market status over age: extensive margin0

.25

.5.7

51

Per

cent

age

of p

opul

atio

n

50 55 60 65Age

FT PT SE UN IN

Figure: West Germany

0.2

5.5

.75

1P

erce

ntag

e of

pop

ulat

ion

50 55 60 65Age

FT PT SE UN IN

Figure: East Germany

0.2

5.5

.75

1P

erce

ntag

e of

pop

ulat

ion

50 55 60 65Age

FT PT SE UN IN


0.2

5.5

.75

1P

erce

ntag

e of

pop

ulat

ion

50 55 60 65Age

FT PT SE UN IN

Figure: South Korea


Data description

Changes in hours work over age: intensive margin

−15

−10

−5

0

50 55 60 65Age

West GermanyEast Germany

South KoreaUnited Kingdom


Data description

Changes in average RTI over age−

1−

.50

.5A

vera

ge R

TI

35 40 45 50 55 60Age

Cohort 1940 1945 1950 1955

Figure: Germany (West)

−.4

−.2

0.2

.4.6

Ave

rage

RT

I

35 40 45 50 55 60Age

Cohort 1940 1945 1950 1955



Data description

Deaton decomposition of RTI changes

DE EG UK40 base age50 -0.56*** -0.33*** -0.20***

(0.06) (0.09) (0.06)51 -0.57*** -0.18** -0.23***

(0.06) (0.09) (0.06)52 -0.65*** -0.31*** -0.22***

(0.06) (0.09) (0.06)53 -0.68*** -0.30*** -0.11*

(0.06) (0.09) (0.06)54 -0.78*** -0.52*** -0.15**

(0.06) (0.09) (0.06)55 -0.82*** -0.51*** -0.14**

(0.06) (0.09) (0.06)56 -0.92*** -0.60*** -0.10

(0.06) (0.09) (0.06)57 -0.97*** -0.70*** -0.03

(0.06) (0.09) (0.06)58 -1.10*** -0.75*** -0.09

(0.06) (0.09) (0.07)59 -1.27*** -0.84*** -0.03

(0.06) (0.09) (0.07)

Notes The regressions include additional controls for cohort (35) and year effects (15). Dependent variable isaverage RTI at that age on each year.


Results

Hypotheses

1 Older people in routine jobs work less hours.

2 Older people in routine jobs retire sooner.


Results

Testing hypothesis 1

We estimate several regressions of the form:

Hoursi ,t = α + RTI β + X ′γ + ε

where:

- i,t indicate individual i in time t;

- RTI are measures the routine task intensity of occupations;

- X is a vector of additional controls including age, gender,household size, marital status, education level, experience,industry dummies and a time trend.


Results

Results: actual RTI

Large Base Short Q. occupation FE Prod. TobitGermany (West)

RTI -0.28*** -0.29*** -0.31*** -0.30*** -0.14*** -0.43*** -0.14***(0.02) (0.03) (0.05) (0.03) (0.04) (0.03) (0.05)

Germany (East)RTI -0.28*** -0.27*** -0.42*** -0.29*** -0.17*** -0.36*** -0.17

(0.03) (0.05) (0.08) (0.05) (0.06) (0.05) (0.11)

Great BritainRTI -0.60*** -0.60*** -0.63*** -0.40*** -0.25*** -0.55*** -0.51***

(0.02) (0.04) (0.06) (0.05) (0.04) (0.04) (0.06)

Age group 40-60 50-60 55-60 50-60 50-60 50-60 50-60Median wage Yes

Indiv. F.E. YesProductivity Yes

Tobit Yes


Results

RTI: alternative measure−

1−

.50

.5

DE EG UK

Specifications Base ShortQ. job Prod. Tobit


Results

Hypotheses

1 Older people in routine jobs work less hours.

2 Older people in routine jobs retire sooner.


Results

Testing hypothesis 2

We estimate accelerated time failure models of the form:

Pr(retirement = t) = α + RTI β + X ′γ + ε

where:

- retirement indicates transition to retirement;

- RTI are measures the routine task intensity of occupations;

- X is a vector of additional controls including age, gender,household size, marital status, education level, experience,industry dummies and a time trend.


Results

Results: hypothesis 2

Base Prod. Q. job TobitGermany (West)

RTI. 0.05*** 0.01 -0.03* 0.05*(0.02) (0.02) (0.02) (0.03)

Germany (East)RTI 0.05* 0.01 -0.01 0.05

(0.03) (0.03) (0.03) (0.04)

Great BritainRTI 0.02 0.01 0.01 0.02

(0.02) (0.02) (0.03) (0.04)


Conclusions

Take-home points

Task content of occupations is relevant in labor supply decisions

Older workers in more routine occupations tended to work lesshours.

No clear effect on retirement. → A human capital story?

Better design of jobs and/or retraining might have little impact onlabor supply.


Conclusions

Points to develop further

1. Take Include workers’ preferences and motivations seriously.

2. Separate emprically task content from boredom.

3. Improve the accelerated time failure models.


Conclusions

Goodbye frame

Thank you for your attention


References

Acemoglu, D. and Autor, D.: 2011, Skills, tasks and technologies: Implicationsfor employment and earnings, Handbook of labor economics 4, 1043–1171.

Akcomak, S., Kok, S. and Rojas-Romagosa, H.: 2015, Technology, offshoringand the task-content of occupations: Evidence from the united kingdom,International Labour Review .

Autor, D. and Dorn, D.: 2009, This job is” getting old”: Measuring changes injob opportunities using occupational age structure, The American EconomicReview 99(2), 45–51.

Autor, D. H. and Dorn, D.: 2013, The growth of low-skill service jobs and thepolarization of the us labor market, American Economic Review103(5), 1553–97.

Autor, D. and Handel, M.: 2013, Putting tasks to the test: Human capital, jobtasks, and wages, Journal of labor Economics 31(2), S59–S96.

Autor, D., Levy, F. and Murnane, R. J.: 2003, The skill content of recenttechnological change: An empirical exploration., Quarterly Journal ofEconomics 118(4).

Beaudry, P., Green, D. A. and Sand, B. M.: 2014, The declining fortunes of theyoung since 2000, American Economic Review 104(5), 381–86.

Beaudry, P., Green, D. A. and Sand, B. M.: 2016, The great reversal in thedemand for skill and cognitive tasks, Journal of Labor Economics34(S1), S199–S247.


References

Blekesaune, M. and Solem, P. E.: 2005, Working conditions and earlyretirement: A prospective study of retirement behavior, Research on Aging27(1), 3–30.

Blinder, A. S.: 2009, How many us jobs might be offshorable?, WorldEconomics 10(2), 41.

Cortes, G. M.: 2016, Where have the middle-wage workers gone? a study ofpolarization using panel data, Journal of Labor Economics 34(1), 63–105.

Dal Bianco, C., Trevisan, E. and Weber, G.: 2015, “i want to break free”. therole of working conditions on retirement expectations and decisions,European Journal of Ageing 12(1), 17–28.URL: http://dx.doi.org/10.1007/s10433-014-0326-8

David H. Autor, Frank Levy, R. J. M.: 2002, Upstairs, downstairs: Computersand skills on two floors of a large bank, Industrial and Labor RelationsReview 55(3), 432–447.

De la Rica, S. and Gortazar, L.: 2016, Differences in job de-routinization inOECD countries: Evidence from PIAAC, IZA Discussion Paper 9736.

Frey, C. B. and Osborne, M.: 2013, The future of employment: Howsusceptible are jobs to computerisation? University of Oxford.

Goos, M. and Manning, A.: 2007, Lousy and lovely jobs: The rising polarizationof work in britain, The review of economics and statistics 89(1), 118–133.


References

Goos, M., Manning, A. and Salomons, A.: 2009, Job polarization in Europe,American Economic Review 99(2), 58–63.

Goos, M., Manning, A. and Salomons, A.: 2014, Explaining job polarization:Routine-biased technological change and offshoring, The AmericanEconomic Review 104(8), 2509–2526.

Ikenaga, T.: 2009, Polarization of the japanese labor market–adoption of ictand changes in tasks required, Japanese Journal of Labour Studies584, 73–90.

Lewandowski, P., Hardy, W. and Keister, R.: 2015, Do entrants take it all? Theevolution of task content of jobs in Poland, IBS Working Papers (10/2015).

Loukidou, L., Loan-Clarke, J. and Daniels, K.: 2009, Boredom in theworkplace: More than monotonous tasks, International Journal ofManagement Reviews 11(4), 381–405.URL: http://dx.doi.org/10.1111/j.1468-2370.2009.00267.x

Marcolin, L., Miroudot, S. and Squicciarini, M.: 2016, GVCs, jobs and routinecontent of occupations, OECD Trade Policy Papers 187.

Melamed, S., Ben-Avi, I., Luz, J. and Green, M. S.: 1995, Objective andsubjective work monotony: effects on job satisfaction, psychological distress,and absenteeism in blue-collar workers., Journal of Applied Psychology80(1), 29.


Conclusions

Michaels, G., Natraj, A. and Van Reenen, J.: 2014, Has ICT polarized skilldemand? Evidence from eleven countries over twenty-five years, Review ofEconomics and Statistics 96(1), 60–77.

Pikos, A. K. and Thomsen, S. L.: 2016, Rising work complexity but decreasingreturns, IZA Discussion Papers 9878, Institute for the Study of Labor (IZA).

Spitz-Oener, A.: 2006, Technical change, job tasks, and rising educationaldemands: looking outside the wage structure, Journal of Labor Economics24(2), 235–270.

phasing out of the labor market

Economy & Finance