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The Economics of Has-beens

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  • Glenn MacDonald
  • Michael S. Weisbach

Abstract

The evolution of technology causes human capital to become obsolete. We study this phenomenon in an overlapping generations setting, assuming that technology evolves stochastically and that older workers find updating uneconomic. Experience and learning by doing may offer the old some income protection, but technology advance always turns them into has-beens to some degree. We focus on the determinants (demand elasticities, persistence of technology change, etc.) of the severity of the has-beens effect. It can be large, even leading to negatively sloped within-occupation age-earnings profiles and an occupation dominated by a few young, high-income workers. Architecture displays the sort of features the theory identifies as magnifying the has-beens effect, and both anecdotes and some data suggest that the has-beens effect in architecture is extreme indeed.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 112 (2004)
Issue (Month): S1 (February)
Pages: S289-S310

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Handle: RePEc:ucp:jpolec:v:112:y:2004:i:s1:p:s289-s310

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Cited by:
  1. Tervio, Marko, 2003. "Mediocrity in Talent Markets," Institute for Research on Labor and Employment, Working Paper Series qt7411j2vx, Institute of Industrial Relations, UC Berkeley.
  2. Mário Centeno & Márcio Corrêa, 2005. "Job Matching, Technological Progress And Worker-Provided On-The-Job Training," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 171, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  3. Brox, James A. & Carvalho, Emanuel, 2008. "A Demographically Augmented Shift-Share Employment Analysis: An Application to Canadian Employment Patterns," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 38(1).
  4. Grip, Andries de, 2006. "Evaluating human capital obsolescence," Open Access publications from Maastricht University urn:nbn:nl:ui:27-17960, Maastricht University.
  5. Perri, T. J., 2003. "The cost of specialized human capital," Economics of Education Review, Elsevier, vol. 22(4), pages 433-438, August.
  6. Lutz Schneider, 2007. "Alterung und technologisches Innovationspotential : Eine Linked-Employer-Employee-Analyse," IWH Discussion Papers 2, Halle Institute for Economic Research.
  7. Inés P. Murillo, 2011. "Human capital obsolescence: some evidence for Spain," International Journal of Manpower, Emerald Group Publishing, vol. 32(4), pages 426-445, July.
  8. Luc Behahel, 2006. "Changement technologique et formation tout au long de la vie," Research Unit Working Papers 0602, Laboratoire d'Economie Appliquee, INRA.
  9. Jun Han & Wing Suen, 2011. "Age structure of the workforce in growing and declining industries: evidence from Hong Kong," Journal of Population Economics, Springer, vol. 24(1), pages 167-189, January.
  10. Alders, Peter, 2005. "Human capital growth and destruction: the effect of fertility on skill obsolescence," Economic Modelling, Elsevier, vol. 22(3), pages 503-520, May.
  11. Meyer, Jenny, 2008. "The Adoption of New Technologies and the Age Structure of the Workforce," ZEW Discussion Papers 08-045, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Weinberg, Bruce A., 2004. "Experience and Technology Adoption," IZA Discussion Papers 1051, Institute for the Study of Labor (IZA).

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