Automation and aging: The impact on older workers in the workforce

Abstract

Developed countries are seeing advances in automation and, at the same time, their populations are aging. In this paper we examine both phenomena using the delay in retirement age as a nexus. Although automation is freeing workers from repetitive, hard work, older workers feel threatened by new automation advances which generate skill mismatches. Two links are highlighted: First, since skill mismatches affect low-skilled older workers more than those who are highly skilled, the latter will remain active for a longer period of time while the former will be pushed to retire. Second, the highly skilled workers who decide to prolong their working lives are a valuable resource for further automation advances because this technology continues to need human-assisted solutions. Our analysis establishes an important role for adult training to fill the gap between initial education and the demands of a rapidly changing labor market in order to encourage individuals to postpone their retirement and, hence, to ensure the sustainability of the social insurance system.