Technology adoption and specialized labor

Elias Carroni, Marco Delogu and Giuseppe Pulina

International Economics, 2023, vol. 173, issue C, 249-259

Abstract: Empirical evidence identifies shortages of specialized labor as one of the main obstacles to technology adoption. In this paper, we explain this phenomenon by developing a model in which firms require specialized labor to produce with a new (more efficient) technology. We assume that the cost of specializing labor increases with the efficiency gains that can be attained through the new technology. This reveals two opposing effects on the endogenous share of specialized labor. On the one hand, there is a wage effect by which efficiency gains widen the wage gap between specialized and unspecialized workers, raising the share of specialized labor. On the other hand, there is a learning effect by which efficiency gains increase specialization costs, reducing the share of specialized labor. We show the learning effect will dominate when products are sufficiently differentiated.

Keywords: Technology adoption; Education; Product differentiation (search for similar items in EconPapers)
JEL-codes: I26 J24 O33 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:173:y:2023:i:c:p:249-259

DOI: 10.1016/j.inteco.2023.01.003

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