Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312181 
Year of Publication: 
2024
Series/Report no.: 
ZEW Discussion Papers No. 24-062
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Firms in developed countries face increasing shortages of young workers. This paper studies the importance of young workers, particularly vocational trainees, for firm technology investments. Leveraging exogenous variation in trainee supply caused by an education reform in Germany in 2001, I show that a reduction in trainee supply decreases firm technology investments. This suggests complementarity between young workers and new technologies. Consistent with firms' lower opportunity costs and higher returns to training young workers than incumbents, the effect is driven by firms exposed to new tech skills. These findings dampen hopes of counteracting labor shortages by substituting labor with capital.
Subjects: 
Endogenous Technological Change
Labor Shortages
Firm Investments
Capital Adjustment Costs
Vintage-Specific Skills
JEL: 
D22
D24
J21
J24
O33
Document Type: 
Working Paper

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