The Age Of Technology And Its Impact On Employee Wages

This paper examines the relationship between wages and the ‘age’ or ‘newness’ of technology using pooled cross-sectional industry-level data and several alternative indicators of the age of technology. Our main finding is that industries with relatively young or immature technologies pay higher wages to workers of given age and education than industries with mature technologies. A one standard deviation decrease in the mean age of the industry's equipment leads to a three-percent increase in wages within demographic groups. This is consistent with the notion that the demand for employee learning is a decreasing function of the age of the technology, that learning is a function of employee ability and effort, and that increases in wages are required to elicit increases in ability and effort. A related finding is that the wages of highly educated workers (especially recent graduates) relative to those of less educated workers are highest in industries using the newest technology; this is consistent with the notion that educated workers are better learners.