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Technological Change and the Consequences of Job Loss

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  • J. Carter Braxton
  • Bledi Taska

Abstract

We examine the role of technological change in explaining the large and persistent decline in earnings following job loss. Using detailed skill requirements from the near universe of online vacancies, we estimate technological change by occupation and find that technological change accounts for 45 percent of the decline in earnings after job loss. Technological change lowers earnings after job loss by requiring workers to have new skills to perform newly created jobs in their prior occupation. When workers lack the required skills, they move to occupations where their skills are still employable but are paid a lower wage.

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  • J. Carter Braxton & Bledi Taska, 2023. "Technological Change and the Consequences of Job Loss," American Economic Review, American Economic Association, vol. 113(2), pages 279-316, February.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:2:p:279-316
    DOI: 10.1257/aer.20210182
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    References listed on IDEAS

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    Cited by:

    1. Diego Dabed Sitnisky & Sabrina Genz & Emilie Rademakers, 2023. "Resilience to Automation: The Role of Task Overlap for Job Finding," Working Papers 2312, Utrecht School of Economics.
    2. Christina Langer & Simon Wiederhold, 2023. "The Value of Early-Career Skills," CESifo Working Paper Series 10288, CESifo.
    3. Thomas Habanabakize & Zandri Dickason-Koekemoer, 2023. "The Role of Industrialization on Employment and Economic Growth in South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 116-123, November.
    4. Shen, Kailing & Zhu, Yanran, 2023. "Labor Force Transition Dynamics: Unemployment Rate or Job Posting Counts?," IZA Discussion Papers 16373, Institute of Labor Economics (IZA).
    5. Tho Pham & Oleksandr Talavera & Zhuangchen Wu, 2023. "Labor Markets during War Time: Evidence from Online Job Ads," Discussion Papers 23-03, Department of Economics, University of Birmingham.

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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