The Great Reversal in the Demand for Skill and Cognitive Tasks
AbstractWhat explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18901.
Date of creation: Mar 2013
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Publication status: published as Paul Beaudry, David A. Green, Ben Sand. "The Great Reversal in the Demand for Skill and Cognitive Tasks," in Alexandre Mas and David Card, organizers, "The Labor Market in the Aftermath of the Great Recession" University of Chicago Press, Journal of Labor Economics (2014)
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- Paul Beadry & Paul Beaudry & David A. Green & Ben Sand, 2013. "The great reversal in the demand for skill and cognitive tasks," STICERD - Public Economics Programme Discussion Papers 22, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-HRM-2013-03-30 (Human Capital & Human Resource Management)
- NEP-LAB-2013-03-30 (Labour Economics)
- NEP-LMA-2013-03-30 (Labor Markets - Supply, Demand, & Wages)
- NEP-NEU-2013-03-30 (Neuroeconomics)
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- Consoli,Davide & Vona,Francesco & Rentocchini,Francesco, 2014. "That was then, this is now: Skills and Routinization in the 2000s," INGENIO (CSIC-UPV) Working Paper Series 201306, INGENIO (CSIC-UPV).
- Christopher L. Smith, 2013. "The dynamics of labor market polarization," Finance and Economics Discussion Series 2013-57, Board of Governors of the Federal Reserve System (U.S.).
- Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: A Literature Review," JRC-IPTS Working Papers on Digital Economy 2013-07, Institute of Prospective Technological Studies, Joint Research Centre.
- repec:ipt:iptwpa:jrc76143 is not listed on IDEAS
- Lindley, Joanne & Machin, Stephen, 2013. "Spatial Changes in Labour Market Inequality," IZA Discussion Papers 7600, Institute for the Study of Labor (IZA).
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