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Occupational Exposure to Capital-Embodied Technical Change

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  • Julieta Caunedo
  • David Jaume
  • Elisa Keller

Abstract

We study differences in exposure to factor-biased technical change among occupations by providing the first measures of capital-embodied technical change (CETC) and of the elasticity of substitution between capital and labor at the occupational level. We document sizable occupational heterogeneity in both measures, but quantitatively, it is the heterogeneity in factor substitutability that fuels workers' exposure to CETC. In a general equilibrium model of worker sorting across occupations, CETC accounts for almost all of the observed labor reallocation in the US between 1984 and 2015. Absent occupational heterogeneity in factor substitutability, CETC accounts for only 17 percent of it.

Suggested Citation

  • Julieta Caunedo & David Jaume & Elisa Keller, 2023. "Occupational Exposure to Capital-Embodied Technical Change," American Economic Review, American Economic Association, vol. 113(6), pages 1642-1685, June.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:6:p:1642-85
    DOI: 10.1257/aer.20211478
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    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • 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
    • 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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