Ageing and robots: The future of skills in the labour market

Most OECD countries are experiencing an ageing of their population. This impacts on their labour force as
large cohorts of retiring workers are being replaced by smaller cohorts of younger workers. To maintain
economic growth, the productivity of workers needs to increase, or additional workers need to be
attracted. Increased productivity relies on increased capital, partially in the form of robots, and increased
human capital; i.e. workers need to acquire new skills. Increasing the working population could be done
by attracting individuals not currently in the labour force, by retaining older workers, or through
migration. The latter option is politically sensitive and difficult to implement on a scale large enough to
compensate for the differences in cohort sizes; the baby boomers that are currently retiring were the
largest cohorts ever to be born in OECD countries.
This project specifically focuses on how the interaction of an ageing population and increased automation
alters the supply and demand of skills in the working age population.
The project is composed of three inter-related stands. The first focuses on inequality in older workers
probability of remaining in the labour force depending on their skill level. The second strand focuses on
the impact that replacing large cohorts of older workers with a younger, smaller cohort has on the overall
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skill distribution, in the context of a changing demand for skills due to automatization. The availability of
new technologies represents a "shock" to the demand for skills, since automation affects occupations
differently depending on the required skills to conduct these tasks (Goos and Manning, 2007; Acemoglu
and Restrepo, 2017). The technology-driven shock to the demand of skills and the change in the supply
of skills driven by the demographic shifts, interact in changing the skill composition of the labour force.
They may generate inter- and intra-generational inequality in access to the labour market, with
potentially strong impacts on income inequality.
The third research strand investigates the long-run effect of investing in Higher Education. Further
expanding Higher Education is often advocated as a policy to improve the resilience of workers to the
technology-driven demand shock. Here we suggest a novel strategy to assess how Higher Education
affects socio-economic and health outcomes, including cognitive skills.
The three research strands will shed new light on i) how job polarisation has affected the employment
outcomes of older workers, ii) which skill sets are currently required to keep older workers in the labour
force, iii) how demographic and technology changes have altered the skill composition of national labour
forces, and iv) to what extent expanding Higher Education affect individuals over their lifetime.