Skill demand and the comparative advantage of age: Jobs tasks and earnings from the 1980s to the 2000s in Germany

Abstract

We study the impact of rapid technological change on age and cohort variation in type of work and wages among German men for the 1986–2006 period. Using a task-based approach, we analyze the consequences that technological progress had on changes in the distribution of tasks performed by the men and the relative wages they received. Technological changes implied fewer physically demanding job tasks and a growing use of cognitive skills, particularly tasks where fluid cognitive abilities are important. A number of earlier physiological and cognitive studies suggest that younger workers have a comparative advantage in terms of physically demanding work and fluid cognitive abilities.Our findings confirm that while physical task use has generally decreased for most age groups, workers in their 50s experienced a more rapid growth not only in cognitively intense tasks than those in their 30s, but also in tasks that were intense in the use of fluid cognitive abilities. Following cohorts over time, we find that all cohorts, also when education was controlled for, experienced a rapid increase in fluid task use by the 2000s. Further, the relative earnings of those in their 50s compared to younger age groups increased – possibly as result of a shift towards cognitively based work tasks where age-earnings curves are relatively steep.