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Adjusting to a New Technology: Experience and Training

  • Elhanan Helpman
  • Antonio Rangel

December 1998 How does the economy react to the arrival of a new major technology? The existing literature on General Purpose Technologies (GPTs) has studied the role that mechanisms like secondary innovations, diffusion, and learning by firms play in the adjustment process. By contrast, we focus on a new mechanisms based on the interplay between technological change and human capital accumulation. We show that technological change that requires more education and training, like computerization, necessarily produces an initial slowdown. Surprisingly, however, technological change that lowers the training requirement, like the move from the artisan shop to the factory, can produce either a bust or a boom. We identify three key properties that determine which effect will occur: (1) the productivity of inexperienced workers; (2) the speed with which experience increases productivity; and (3) the level of general skills required to operate the new technology.

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Paper provided by Stanford University, Department of Economics in its series Working Papers with number 99002.

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Date of creation: Dec 1998
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Handle: RePEc:wop:stanec:99002
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  1. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April.
  2. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
  3. Philippe AGHION & Peter HOWITT, 1998. "On the Macroeconomic Effects of Major Technological Change," Annales d'Economie et de Statistique, ENSAE, issue 49-50, pages 53-75.
  4. Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276 National Bureau of Economic Research, Inc.
  5. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
  6. Helpman, E. & Trajtenberg, M., 1996. "Diffusion of General Purpose Technologies," Papers 24-96, Tel Aviv - the Sackler Institute of Economic Studies.
  7. Elhanan Helpman & Manuel Trajtenberg, 1994. "A Time to Sow and a Time to Reap: Growth Based on General Purpose Technologies," NBER Working Papers 4854, National Bureau of Economic Research, Inc.
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