Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings

Brad Hershbein and Lisa Kahn

No 16-254, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: Routine-biased technological change (RBTC), whereby routine-task jobs are replaced by machines and overseas labor, shifts demand towards high- and low-skill jobs, resulting in job polarization of the U.S. labor market. We test whether recessions accelerate this process. In doing so we establish a new fact about the demand for skill over the business cycle. Using a new database containing the near-universe of electronic job vacancies that span the Great Recession, we find evidence of upskilling—firms demanding more-skilled workers when local employment growth is slower. We find that upskilling is sizable in magnitude and largely due to changes in skill requirements within firm-occupation cells. We argue that upskilling is driven primarily by firm restructuring of production towards more-skilled workers. We show that 1) skill demand remains elevated after local economies recover from the Great Recession, driven primarily by the same firms that upskilled early in the recovery; 2) among publicly traded firms in our data, those that upskill more also increase capital stock by more over the same time period; and 3) upskilling is concentrated within routine-task occupations -- those most vulnerable to RBTC. Our result is unlikely to be driven by firms opportunistically seeking to hire more-skilled workers in a slack labor market, and we rule out other cyclical explanations. We thus present the first direct evidence that the Great Recession precipitated new technological adoption.

Keywords: Job polarization; job postings; RBTC; recessions; routine-biased technological change; upskilling; vacancies (search for similar items in EconPapers)
JEL-codes: D22 E32 J23 J24 M51 O33 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-bec, nep-ino, nep-mac, nep-pke and nep-tid
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Citations: View citations in EconPapers (40)

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Related works:
Journal Article: Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings (2018)
Working Paper: Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings (2016)
Working Paper: Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings
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