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Fast and Slow Technological Transitions

Author

Listed:
  • Rodrigo Adão
  • Martin Beraja
  • Nitya Pandalai-Nayar

Abstract

Do economies adjust slowly to certain technological innovations and more rapidly to others? We argue that the adjustment is slower when innovations mainly benefit production activities requiring skills that are more different from those used in the rest of the economy. When such skill specificity is stronger, the adjustment of labor markets is driven less by the fast reallocation of older incumbent workers and more by the gradual entry of younger generations. We first document that the US labor market adjusted differently to early twentieth-century manufacturing innovations than to recent information and communication technologies (ICTs). We then build an overlapping-generations model of technological transitions and characterize how skill specificity affects equilibrium dynamics. Skill specificity helps explain why the ICT transition was slower, driven entirely by the entry of younger generations.

Suggested Citation

  • Rodrigo Adão & Martin Beraja & Nitya Pandalai-Nayar, 2024. "Fast and Slow Technological Transitions," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 2(2), pages 183-227.
    • Handle: RePEc:ucp:jpemac:doi:10.1086/730223
    DOI: 10.1086/730223
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    Citations

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    Cited by:

    1. David Autor & David Dorn & Gordon Hanson & Maggie R. Jones & Bradley Setzler, 2024. "Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization," Working Papers 24-78, Center for Economic Studies, U.S. Census Bureau.
    2. Lipowski, Cäcilia, 2024. "No teens, no tech: How shortages of young workers hinder firm technology investments," ZEW Discussion Papers 24-062, ZEW - Leibniz Centre for European Economic Research.
    3. repec:cam:camjip:2427 is not listed on IDEAS
    4. Kroeger Thilo & Schaffranka Claudia & Schnitzer Monika, 2025. "Structural Change in Germany: Challenges for Growth and Productivity," Intereconomics: Review of European Economic Policy, Sciendo, vol. 60(5), pages 290-296.
    5. Bocquet, L., 2024. "The Network Origin of Slow Labour Reallocation," Cambridge Working Papers in Economics 2465, Faculty of Economics, University of Cambridge.
    6. 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.
    7. Tianyu Fan, 2025. "The Labor Market Incidence of New Technologies," Papers 2504.04047, arXiv.org, revised Nov 2025.
    8. Michael J. Böhm & Ben Etheridge & Aitor Irastorza-Fadrique, 2024. "The impact of labour demand shocks when occupational labour supplies are heterogeneous," IFS Working Papers W24/28, Institute for Fiscal Studies.
    9. Hennessy, David A., 2025. "Information as a catalyst for industrialization," Journal of Economic Behavior & Organization, Elsevier, vol. 230(C).
    10. Mantej Pardesi, 2025. "Technology spikes and skill formation adjustment: Role of capital investment spikes in firm's training and hiring decision," Economics of Education Working Paper Series 0249, University of Zurich, Department of Business Administration (IBW).
    11. Bonadio, Barthélémy & Huo, Zhen & Levchenko, Andrei A. & Pandalai-Nayar, Nitya, 2025. "Globalization, structural change and international comovement," Journal of Monetary Economics, Elsevier, vol. 151(C).

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