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The Long-Term Consequences of the Tech Bubble on Skilled Workers' Earnings

Author

Listed:
  • Hombert, Johan

    (HEC Paris - Finance Department)

  • Matray, Adrien

    (Princeton University)

Abstract

We use French matched employer-employee data to track skilled individuals entering the labor market during the late 1990s tech bubble. The boom led to a sharp increase in the share of skilled entrants in the tech sector, which offers relative higher wages at the time. When the boom ends, however, the wage premium reverses and these skilled workers end up with a 5.5% wage discount ten years out, relative to similar peers who started in a non-tech sector. Other moments of the wage distribution of the boom, pre-boom, and post-boom cohorts are inconsistent with explanations based on a selection effect or a cycle effect. Instead, we provide suggestive evidence that workers allocated to the booming tech sector accumulate human capital early in their career that rapidly becomes obsolete.

Suggested Citation

  • Hombert, Johan & Matray, Adrien, 2018. "The Long-Term Consequences of the Tech Bubble on Skilled Workers' Earnings," HEC Research Papers Series 1294, HEC Paris.
    • Handle: RePEc:ebg:heccah:1294
    DOI: 10.2139/ssrn.3187093
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    Cited by:

    1. Mueller, Clemens, 2023. "Non-Compete Agreements and Labor Allocation Across Product Markets," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277621, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    ICT; ICT boom; wage dynamics;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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