Adjusting to a New Technology: Experience and Training

Elhanan Helpman, Antonio Rangel

NBER Working Paper No. 6551
Issued in May 1998
NBER Program(s):   EFG

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.

(1565 K)

Published: Journal of Economic Growth, Vol. 4, no. 4 (December 1999): 359-383

This paper is available as PDF (1565 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX