Give up or catch up? Exploring the wage effect of early-career technological change for medium-skilled workers

• In Event: 50220 - Section on Organizations, Occupations, and Work Roundtables
  In Refereed Roundtable (60 minute): Table 15: Workers' Skills and Earnings

Abstract

Recent research has focused on the impact of technological change on wages for young medium-skilled workers, yet little is known about how these wage effects evolve over time and the mechanisms behind them. Therefore, this study investigates i) the wage effect of experiencing technological change upon labor market entry for medium-skilled workers in Germany and ii) the role of switching to low-skilled jobs and unemployment in mediating this effect. Using job tasks data linked to German administrative records, the analysis tracks medium-skilled workers who entered the labor market from 1999 to 2012, observing the technological change they encountered in their first year of working and following their wage and career trajectories over their first decade in the labor market. Our fixed-effect regression analyses reveal no immediate effect of early-career technological change on yearly wages. However, a positive wage effect emerges from the 5th year of labor market entry and grows as workers gain experience. Mediation analysis shows that, while switching to low-skilled jobs does not explain this wage effect, reduced unemployment days play a significant role. These findings suggest that early-career technological change offers young medium-skilled workers opportunities to accelerate human capital accumulation, providing a long-term wage advantage.

Authors

• Jinyi Wei, Maastricht University

• Dominik Becker, Federal Institute for Vocational Education and Training (BIBB)