No teens, no tech: How shortages of young workers hinder firm technology investments


Lipowski, Cäcilia


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URN: urn:nbn:de:bsz:180-madoc-686912
Document Type: Working paper
Year of publication: 2024
The title of a journal, publication series: ZEW Discussion Papers
Volume: 24-062
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D22 , D24 , J21 , J24 , O33,
Keywords (English): endogenous technological change , labor shortages , firm investments , capital adjustment costs , vintage-specific skills
Abstract: Firms in developed countries face increasing shortages of young workers. This paper studies the importance of young workers, particularly vocational trainees, for firm technology investments. Leveraging exogenous variation in trainee supply caused by an education reform in Germany in 2001, I show that a reduction in trainee supply decreases firm technology investments. This suggests complementarity between young workers and new technologies. Consistent with firms’ lower opportunity costs and higher returns to training young workers than incumbents, the effect is driven by firms exposed to new tech skills. These findings dampen hopes of counteracting labor shortages by substituting labor with capital.




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