Fast and Slow Technological Transitions

Rodrigo Adão, Martin Beraja and Nitya Pandalai-Nayar

Journal of Political Economy Macroeconomics, 2024, vol. 2, issue 2, 183 - 227

Abstract: Do economies adjust slowly to certain technological innovations and more rapidly to others? We argue that the adjustment is slower when innovations mainly benefit production activities requiring skills that are more different from those used in the rest of the economy. When such skill specificity is stronger, the adjustment of labor markets is driven less by the fast reallocation of older incumbent workers and more by the gradual entry of younger generations. We first document that the US labor market adjusted differently to early twentieth-century manufacturing innovations than to recent information and communication technologies (ICTs). We then build an overlapping-generations model of technological transitions and characterize how skill specificity affects equilibrium dynamics. Skill specificity helps explain why the ICT transition was slower, driven entirely by the entry of younger generations.

Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://dx.doi.org/10.1086/730223 (application/pdf)
http://dx.doi.org/10.1086/730223 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpemac:doi:10.1086/730223

Access Statistics for this article

More articles in Journal of Political Economy Macroeconomics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().