Innovations allow high ability workers, through costly investment in training, to partially separate themselves from the low ability workers. Competition by firms for the high ability workers results in the firms implementing the costly new technologies as a screening device. When signalling by workers is indeed imperfect, screening by employers is possible, and the costs of opening a vacancy are small, we show that it is possible for resources to be devoted to develop a technology, workers to follow costly training to be able to work with this technology, and firms spending money on its implementation, although it is common knowledge that the new technology has no effect on productivity. Income inequality increases along the way within a given cohort of workers. When the costs of opening a vacancy are large, these conclusions remain valid, while additionally more workers invest in training, firms implement more of the new technology, unemployment arises, income inequality increases even more, production falls in both firms, while measured productivity increases. So different countries may have different experiences with the introduction of new technologies depending on the costs of opening a vacancy in that country. Countries for which the effect on productivity growth seems to be the largest, may actually be the ones for which the introduction of new technologies comes at the largest social cost.
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