IDEAS home Printed from https://ideas.repec.org/p/iso/educat/0249.html
   My bibliography  Save this paper

Technology spikes and skill formation adjustment: Role of capital investment spikes in firm's training and hiring decision

Author

Abstract

I study how investment spikes in technologies and complementary infrastructure influence firms' hiring and training strategies. While prior work emphasizes how technologies reallocate skill demand, few focus on how firms acquire the required skills. Using linked employer-employee data on German establishments, I identify spikes by their technological composition and capital vintages. Event study estimates show that investment spikes in ICT and production line technologies lead to an upscaling effect raising employment by external hiring followed by training of young apprentices. Combining technologies with factories and plants induces firms to use apprenticeship training without an increase in external hiring. Incumbent workers are trained when investment spikes renew the vintage of firm's capital. The findings support a vintage human capital framework in which technology adoption induces firms to gradually adjust workforce through hiring and training while preserving expertise of incumbent workers.

Suggested Citation

  • 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).
    • Handle: RePEc:iso:educat:0249
    as

    Download full text from publisher

    File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0249_lhwpaper.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    2. Daron Acemoglu & David Autor & Jonathon Hazell & Pascual Restrepo, 2022. "Artificial Intelligence and Jobs: Evidence from Online Vacancies," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 293-340.
    3. Domini, Giacomo & Grazzi, Marco & Moschella, Daniele & Treibich, Tania, 2021. "Threats and opportunities in the digital era: Automation spikes and employment dynamics," Research Policy, Elsevier, vol. 50(7).
    4. Eric A. Hanushek & Guido Schwerdt & Ludger Woessmann & Lei Zhang, 2017. "General Education, Vocational Education, and Labor-Market Outcomes over the Lifecycle," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 48-87.
    5. Andrew B. Abel & Janice C. Eberly, 2012. "Investment, Valuation, and Growth Options," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-32.
    6. Boothby, Daniel & Dufour, Anik & Tang, Jianmin, 2010. "Technology adoption, training and productivity performance," Research Policy, Elsevier, vol. 39(5), pages 650-661, June.
    7. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    8. Gourio, Francois & Kashyap, Anil K, 2007. "Investment spikes: New facts and a general equilibrium exploration," Journal of Monetary Economics, Elsevier, vol. 54(Supplemen), pages 1-22, September.
    9. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    10. Jovanovic, Boyan & Nyarko, Yaw, 1996. "Learning by Doing and the Choice of Technology," Econometrica, Econometric Society, vol. 64(6), pages 1299-1310, November.
    11. Magne K. Asphjell & Wilko Letterie & Øivind A. Nilsen & Gerard A. Pfann, 2014. "Sequentiality Versus Simultaneity: Interrelated Factor Demand," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 986-998, December.
    12. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum & Nicole Woessner, 2021. "The Adjustment of Labor Markets to Robots [“Skills, Tasks and Technologies: Implications for Employment and Earnings]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3104-3153.
    13. Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1165-1217.
    14. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    15. 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.
    16. Brunello, Giorgio & Rückert, Désirée & Weiss, Christoph & Wruuck, Patricia, 2023. "Advanced digital technologies and investment in employee training: Complements or substitutes?," EIB Working Papers 2023/01, European Investment Bank (EIB).
    17. Christian Dustmann & Uta Schönberg, 2012. "What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 36-61, April.
    18. Albinowski, Maciej & Lewandowski, Piotr, 2024. "The impact of ICT and robots on labour market outcomes of demographic groups in Europe," Labour Economics, Elsevier, vol. 87(C).
    19. Mühlemann, Samuel, 2024. "AI Adoption and Workplace Training," IZA Discussion Papers 17367, Institute of Labor Economics (IZA).
    20. 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.
    21. Dmitriy Stolyarov & Boyan Jovanovic, 2000. "Optimal Adoption of Complementary Technologies," American Economic Review, American Economic Association, vol. 90(1), pages 15-29, March.
    22. Russell W. Cooper & John C. Haltiwanger, 2006. "On the Nature of Capital Adjustment Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 611-633.
    23. Leonid Kogan & Dimitris Papanikolaou & Lawrence D. W. Schmidt & Bryan Seegmiller, 2021. "Technology, Vintage-Specific Human Capital, and Labor Displacement: Evidence from Linking Patents with Occupations," NBER Working Papers 29552, National Bureau of Economic Research, Inc.
    24. Rammer, Christian & Fernández, Gastón P. & Czarnitzki, Dirk, 2022. "Artificial intelligence and industrial innovation: Evidence from German firm-level data," Research Policy, Elsevier, vol. 51(7).
    25. Kirill Borusyak & Xavier Jaravel & Jann Spiess, 2024. "Revisiting Event-Study Designs: Robust and Efficient Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3253-3285.
    26. Richard Disney & Helen Miller & Thomas Pope, 2020. "Firm‐level Investment Spikes and Aggregate Investment over the Great Recession," Economica, London School of Economics and Political Science, vol. 87(345), pages 217-248, January.
    27. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
    28. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    29. Manuel Aepli & Samuel Muehlemann & Harald Pfeifer & Jürg Schweri & Felix Wenzelmann & Stefan C. Wolter, 2024. "The Impact of Hiring Costs for Skilled Workers on Apprenticeship Training: A Comparative Study," CESifo Working Paper Series 11066, CESifo.
    30. Ann Bartel & Casey Ichniowski & Kathryn Shaw, 2007. "How Does Information Technology Affect Productivity? Plant-Level Comparisons of Product Innovation, Process Improvement, and Worker Skills," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1721-1758.
    31. Letterie, Wilko A. & Pfann, Gerard A., 2007. "Structural identification of high and low investment regimes," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 797-819, April.
    32. Pinar Geylani & Spiro Stefanou, 2013. "Linking investment spikes and productivity growth," Empirical Economics, Springer, vol. 45(1), pages 157-178, August.
    33. Sakellaris, Plutarchos, 2004. "Patterns of plant adjustment," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 425-450, March.
    34. Steffen Mueller, 2008. "Capital stock approximation using firm level panel data," Working Papers 038, Bavarian Graduate Program in Economics (BGPE).
    35. Guo, Xin & Miao, Jianjun & Morellec, Erwan, 2005. "Irreversible investment with regime shifts," Journal of Economic Theory, Elsevier, vol. 122(1), pages 37-59, May.
    36. Arthur Fishman & Boyan Jovanovic, 2021. "Obsolescence of Capital and Investment Spikes," American Economic Journal: Microeconomics, American Economic Association, vol. 13(4), pages 135-171, November.
    37. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
    38. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 339-376.
    39. Mueller Steffen, 2008. "Capital Stock Approximation using Firm Level Panel Data: A Modified Perpetual Inventory Approach," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(4), pages 357-371, August.
    40. J. Bradford Jensen & Robert H. McGuckin & Kevin J. Stiroh, 2001. "The Impact Of Vintage And Survival On Productivity: Evidence From Cohorts Of U.S. Manufacturing Plants," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 323-332, May.
    41. Jasmine Mondolo, 2022. "The composite link between technological change and employment: A survey of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1027-1068, September.
    42. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan, 2024. "The pandemic push: Digital technologies and workforce adjustments," Labour Economics, Elsevier, vol. 89(C).
    43. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages 112-142, February.
    44. Janssen, Simon & Mohrenweiser, Jens, 2018. "The Shelf Life of Incumbent Workers during Accelerating Technological Change: Evidence from a Training Regulation Reform," IZA Discussion Papers 11312, Institute of Labor Economics (IZA).
    45. Babina, Tania & Fedyk, Anastassia & He, Alex & Hodson, James, 2024. "Artificial intelligence, firm growth, and product innovation," Journal of Financial Economics, Elsevier, vol. 151(C).
    46. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
    47. Kredler, Matthias, 2014. "Vintage human capital and learning curves," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 154-178.
    48. Huggett, Mark & Ospina, Sandra, 2001. "Does productivity growth fall after the adoption of new technology?," Journal of Monetary Economics, Elsevier, vol. 48(1), pages 173-195, August.
    49. Wilko Letterie & Gerard A. Pfann & Sher Verick, 2010. "On Lumpiness in the Replacement and Expansion of Capital," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(3), pages 263-281, June.
    50. Baker, Andrew C. & Larcker, David F. & Wang, Charles C.Y., 2022. "How much should we trust staggered difference-in-differences estimates?," Journal of Financial Economics, Elsevier, vol. 144(2), pages 370-395.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2015. "Analyzing the impact of investment spikes on dynamic productivity growth," Omega, Elsevier, vol. 54(C), pages 116-124.
    2. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2013. "Dynamics of Investment and Firm Performance: Comparative Evidence from Manufacturing Industries," GREDEG Working Papers 2013-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    3. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2009. "Lumpy investments, factor adjustments, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 104-127, January.
    4. Pinar Celikkol Geylani & Spiro E. Stefanou, 2008. "Linking Investment Spikes and Productivity Growth: U.S. Food Manufacturing Industry," Working Papers 08-36, Center for Economic Studies, U.S. Census Bureau.
    5. Cäcilia Lipowski & Cäcilia vom Baur, 2024. "No Teens, No Tech: How Shortages of Young Workers Hinder Firm Technology Investments," CESifo Working Paper Series 11471, CESifo.
    6. Sakellaris, Plutarchos, 2004. "Patterns of plant adjustment," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 425-450, March.
    7. Pinar Geylani & Spiro Stefanou, 2013. "Linking investment spikes and productivity growth," Empirical Economics, Springer, vol. 45(1), pages 157-178, August.
    8. Fabio Verona, 2014. "Investment Dynamics with Information Costs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(8), pages 1627-1656, December.
    9. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2005. "Lumpy Investments, Factor Adjustments and Productivity," Discussion Papers 441, Statistics Norway, Research Department.
    10. Domini, Giacomo & Grazzi, Marco & Moschella, Daniele & Treibich, Tania, 2021. "Threats and opportunities in the digital era: Automation spikes and employment dynamics," Research Policy, Elsevier, vol. 50(7).
    11. Yu, Xiaodan & Dosi, Giovanni & Grazzi, Marco & Lei, Jiasu, 2017. "Inside the virtuous circle between productivity, profitability, investment and corporate growth: An anatomy of Chinese industrialization," Research Policy, Elsevier, vol. 46(5), pages 1020-1038.
    12. Mühlemann, Samuel, 2024. "AI Adoption and Workplace Training," IZA Discussion Papers 17367, Institute of Labor Economics (IZA).
    13. Sandra Martina Leitner, 2008. "Interrelatedness, Dynamic Factor Adjustment Patterns and Firm Heterogeneity in Austrian Manufacturing," Economics working papers 2008-03, Department of Economics, Johannes Kepler University Linz, Austria.
    14. repec:zbw:bofrdp:2013_018 is not listed on IDEAS
    15. Martin Falk & Sigbjorn Landazuri Tveteraas, 2020. "Modelling the wider effects of ski lift investments," Empirical Economics, Springer, vol. 59(1), pages 259-274, July.
    16. Fabio Verona, 2014. "Investment Dynamics with Information Costs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(8), pages 1627-1656, December.
    17. Richard Disney & Helen Miller & Thomas Pope, 2018. "Firm-level investment spikes and aggregate investment over the Great Recession," IFS Working Papers W18/03, Institute for Fiscal Studies.
    18. Lapatinas Athanasios, 2012. "On the Interrelation of Capital and Labor Adjustment Costs at the Firm Level," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(3), pages 1-36, September.
    19. Zhou, Yuwen & Shi, Xin, 2025. "How does digital technology adoption affect corporate employment? Evidence from China," Economic Modelling, Elsevier, vol. 147(C).
    20. Plutarchos Sakellaris & Daniel J. Wilson, 2004. "Quantifying Embodied Technological Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 1-26, January.
    21. Luis A. Puch & Omar Licandro & Reyes Maroto, 2005. "Innovation, Machine Replacement and Productivity," 2005 Meeting Papers 606, Society for Economic Dynamics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iso:educat:0249. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sara Brunner (email available below). General contact details of provider: https://edirc.repec.org/data/isuzhch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.