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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. Andreas Schaefer & Maik T. Schneider, 2024. "Public Policy Responses to AI," Graz Economics Papers 2024-06, University of Graz, Department of Economics.
    2. J. Carter Braxton & Bledi Taska, 2025. "Technological Change and Insuring Job Loss," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 58, October.
    3. Kostøl, Andreas Ravndal & Merkle, Matthew C. & Grindaker, Morten, 2024. "Layoff Costs and Learning about Employer Financial Distress," IZA Discussion Papers 17340, Institute of Labor Economics (IZA).
    4. Long, Xianling & Wang, Zhiqiang, 2025. "From heat to high-tech: How innovation responds to climate change," Journal of Development Economics, Elsevier, vol. 176(C).
    5. Ashani Abayasekara & Sonja de New & David Johnston, 2025. "Worker Impacts from the Shutdown of a National Manufacturing Industry," Papers 2025-15, Centre for Health Economics, Monash University.
    6. Pham, Tho & Talavera, Oleksandr & Wu, Zhuangchen, 2023. "Labor markets during war time: Evidence from online job advertisements," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1316-1333.
    7. 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.
    8. Nwaobi, Godwin, 2024. "Nigerian Firms and Digital Transformation:Incubations, Unipoding and Prospects," MPRA Paper 121833, University Library of Munich, Germany.
    9. Dabed, Diego & Genz, Sabrina & Rademakers, Emilie, 2025. "Equalising the effects of automation? The role of task overlap for job finding," Labour Economics, Elsevier, vol. 96(C).
    10. Hanna Brosch & Philipp Lergetporer & Florian Schoner, 2025. "Worker Beliefs About Firm Training," CESifo Working Paper Series 12183, CESifo.
    11. Simon Wiederhold & Christina Langer, 2023. "The Value of Early-Career Skills," Growth Lab Working Papers 204, Harvard's Growth Lab.
    12. Falck, Oliver & Guo, Yuchen & Langer, Christina & Lindlacher, Valentin & Wiederhold, Simon, 2025. "Firm Training, Automation, and Wages: International Worker-Level Evidence," IWH Discussion Papers 27/2024, Halle Institute for Economic Research (IWH), revised 2025.
    13. Katovich, Erik & Parker, Dominic & Poelhekke, Steven, 2023. "Timing is Everything: Labor Market Winners and Losers during Boom-Bust Cycles," CEPR Discussion Papers 17887, C.E.P.R. Discussion Papers.
    14. 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.
    15. Falck, Oliver & Guo, Yuchen & Langer, Christina & Lindlacher, Valentin & Wiederhold, Simon, 2024. "Training, Automation, and Wages: International Worker-Level Evidence," IZA Discussion Papers 17503, Institute of Labor Economics (IZA).
    16. Daly, Moira & Groes, Fane & Jensen, Mathias Fjællegaard, 2025. "Skill demand versus skill use: Comparing job posts with individual skill use on the job," Labour Economics, Elsevier, vol. 92(C).
    17. Aneta Bonikowska & René Morissette & Grant Schellenberg, 2024. "Cumulative earnings of Black, Chinese, South Asian and White individuals born in Canada," Economic and Social Reports 202401100004e, Statistics Canada, Analytical Studies and Modelling Branch.
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    19. Shen, Kailing & Zhu, Yanran, 2023. "Labor Force Transition Dynamics: Unemployment Rate or Job Posting Counts?," IZA Discussion Papers 16373, Institute of Labor Economics (IZA).
    20. Dupuy, Arnaud & Raux, Morgan & Signorelli, Sara, 2024. "Digitalization, Change in Skill Distance between Occupations and Worker Mobility: A Gravity Model Approach," IZA Discussion Papers 17535, Institute of Labor Economics (IZA).
    21. Richard Audoly & Manudeep Bhuller & Tore Adam Reiremo, 2024. "The Pay and Non-Pay Content of Job Ads," Staff Reports 1124, Federal Reserve Bank of New York.
    22. Qiao, Xiaole & He, Yang & Du, Qiang, 2025. "How does the urban digital economy drive labor allocation in China?—A perspective of factor mobility between digital and non-digital enterprises," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1159-1175.
    23. Valentina Gonzalez‐Rostani, 2024. "Engaged robots, disengaged workers: Automation and political alienation," Economics and Politics, Wiley Blackwell, vol. 36(3), pages 1703-1730, November.
    24. Rouwendal, Harm Jan & Koster, Sierdjan, 2025. "Does it take extra skills to work in a large city?," Regional Science and Urban Economics, Elsevier, vol. 112(C).
    25. 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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