Technological Change, Job Characteristics, and Employment of Elderly Workers : Evidence from Korea

English Abstract: We investigate how the adoption of new production technology differently affects the risk of job separation among young and old employees in Korea by analyzing establishment-level panel data linked with administrative employment insurance records on individual workers. To address potential endogeneity associated with a firm’s technology adoption, we conduct instrumental variable estimations with a two-stage residual inclusion (2SRI) approach. The results suggest that technological changes (indicated by newly adopted automation, increased investment in IT, and increased purchases of IT equipment) positively affect the overall employment of incumbent workers. However, the employment of elderly workers is less favorably affected by newly adopted technologies compared to that of younger workers. In some conditions, technological changes increase the retirement risk of older workers absolutely, as well as relative to that of younger workers. Newly adopted automation negatively affects the employment of elderly male workers who are engaged in clerical occupations. Investment in IT or IT equipment raises the probability of the involuntary retirement of older workers