Technology, Labour Market Institutions and Early Retirement: Evidence from Finland

Abstract

There are two major barriers to increasing employment of older workers. First, older workers engaged in codifiable, routine tasks are particularly prone to the risk of being displaced by computers and robots. Second, several countries have in place various labour market institutions that encourage early retirement, such as exceptional entitlements or looser criteria for unemployment and disability benefits applied to older individuals. We present evidence that these two factors reinforce each other to push older workers out of employment. We find that older workers who are more exposed to digital technologies are more likely to leave employment, and that this effect is significantly magnified when they are eligible to an extension of unemployment benefits until the earliest age for drawing old age pension. Furthermore, our findings imply that a policy reform that tightens the eligibility for the benefit extension would increase mostly the employment of older workers that are more exposed to digital technologies.

Robots and unions: The moderating effect of organized labour on technological unemployment

“…When unemployment is the dependent variable, the main and interaction effects of robot exposure fail to reach statistical significance, which should be remarked as a limitation to our study. Even if industrial robots affect employment outcomes in the manufacturing sector directly, these changes are not necessarily reflected in equivalent changes in unemployment, since the workers displaced by industrial robots have other transition options such as retraining or (early) retirement (Yashiro et al, 2020).…”

“…For instance, Dauth et al (2021: 3127–3128) find that robot-exposed manufacturing workers are twice as likely to remain with their original employer in German regions with stronger unionization. In Finland, automation-exposed workers have a higher likelihood of early retirement, which might be interpreted as another channel of protecting workers from technological unemployment (Ebbinghaus, 2001; Yashiro et al, 2020).…”

New Technology and Loss of Paid Employment among Older Workers: Prospective Cohort Study

“…Older workers could, therefore, experience more situations with technologically-related stress arising from dependency on, e.g., information and communication technologies at work, which could induce stress and exhaustion [ 11 , 12 ]. Furthermore, a recent report employing data from Finland revealed that an individual aged 50 or above in occupations that are more exposed to digital technologies has a higher probability of exiting employment each year [ 13 ].…”