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Adjusting to a New Technology: Experience and Training

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  • Elhanan Helpman
  • Antonio Rangel

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 labor 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

  • Elhanan Helpman & Antonio Rangel, 1998. "Adjusting to a New Technology: Experience and Training," NBER Working Papers 6551, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6551
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    References listed on IDEAS

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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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