Adjusting to a New Technology: Experience and Training
NBER Working Paper No. 6551
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.
Document Object Identifier (DOI): 10.3386/w6551
Published: Journal of Economic Growth, Vol. 4, no. 4 (December 1999): 359-383
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