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Adjusting to a New Technology: Experience and Training

Author

Listed:
  • Helpman, Elhanan
  • Rangel, Antonio

Abstract

In this paper we study how aggregate output responds to the arrival of a new General Purpose Technology (GPT) by looking at adjustment mechanisms that operate through labour markets. We show that under a wide set of circumstances the arrival of a new GPT that raises long-run output can trigger a recession in the short run. Furthermore, we characterize features of the GPT that produce a cyclical adjustment path. An initial recession occurs whenever a higher education level is required to operate the new GPT. But a recession can also occur when the new GPT has lower educational requirements. A cyclical adjustment path is more likely when inexperienced workers are less productive with the new technology and the faster productivity rises with experience in the new sector.

Suggested Citation

  • Helpman, Elhanan & Rangel, Antonio, 1998. "Adjusting to a New Technology: Experience and Training," CEPR Discussion Papers 1930, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1930
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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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