Working Paper: NBER ID: w31743
Authors: Costas Cavounidis; Qingyuan Chai; Kevin Lang; Raghav Malhotra
Abstract: We consider large, permanent shocks to individual occupations whose arrival date is uncertain. We are motivated by the advent of self-driving trucks, which will dramatically reduce demand for truck drivers. Using a bare-bones overlapping generations model, we examine an occupation facing obsolescence. We show that workers must be compensated to enter the occupation - receiving what we dub obsolescence rents - with fewer and older workers remaining in the occupation. We investigate the market for teamsters at the dawn of the automotive truck as an á propos parallel to truckers themselves, as self-driving trucks crest the horizon. As widespread adoption of trucks drew nearer, the number of teamsters fell, the occupation became ‘grayer’, and teamster wages rose, as predicted by the model.
Keywords: obsolescence rents; self-driving trucks; labor market dynamics; teamsters; technological change
JEL Codes: J20; J31; J62; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| anticipated obsolescence of an occupation (J63) | necessity for higher initial wages to attract workers (J39) |
| arrival of technological shock (O49) | changes in labor supply (J20) |
| arrival of technological shock (O49) | decrease in younger workers entering the occupation (J21) |
| arrival of technological shock (O49) | increase in older workers entering the occupation (J21) |
| anticipated arrival of the shock (Y20) | rise in wages (J31) |
| anticipated arrival of the shock (Y20) | fall in employment (J63) |
| anticipation of shock influences wage trends (J31) | anticipation of shock influences employment trends (J63) |
| no-shock steady state (C62) | highest employment (J68) |
| anticipatory dread stage (D84) | lower employment than no-shock steady state (E24) |
| aftershock stage (H12) | lowest employment (J63) |
| wages rise before shock (J39) | wages decline after shock (J31) |