Working Paper: NBER ID: w24373
Authors: Alexandr Kopytov; Nikolai Roussanov; Mathieu Taschereau-Dumouchel
Abstract: Recent empirical evidence suggests that job polarization associated with skill-biased technological change accelerated during the Great Recession. We use a standard neoclassical growth framework to analyze how business cycle fluctuations interact with the long-run transition towards a skill-intensive technology. In the model, since adopting the new technology disrupts production, firms prefer to do so in recessions, when profits are low. Similarly, workers also tend to learn new skills during downturns. As a result, recessions are deeper during periods of technological transition, but they also speed up adoption of the new technology. We document evidence for these mechanisms in the data. Our calibrated model is able to match both the long-run downward trend in routine employment and the dramatic impact of the Great Recession. We also show that even in the absence of the Great Recession the routine employment share would have reached the observed level by the year 2012.
Keywords: job polarization; technological change; recessions; skill acquisition
JEL Codes: E24; E25; E3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Recessions (E32) | Adoption of new technologies (O33) |
| Recessions (E32) | Skill acquisition among low-skill workers (J24) |
| Adoption of new technologies (O33) | Decrease in routine employment (J63) |
| Recessions (E32) | Job polarization trend (J29) |
| Recessions (E32) | Increase in non-routine cognitive and manual jobs (J29) |