Abstract

AbstractSome cognitive functions, such as the ability to update skills and adapt to changes in working conditions, are known to vary with age. With population aging it becomes increasingly difficult for firms to find workers with up‐to‐date skills. As a result, countries with aging populations start losing comparative advantage in industries that rely heavily on those skills. We test this hypothesis and find robust evidence for a significant negative effect of population aging on comparative advantage of a country in industries that are intensive in skill adaptability of labor force, in both the cross‐sectional and the dynamic panel data sets.

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