Technology Boom, Labor Reallocation, and Human Capital Depreciation
59 Pages Posted: 4 Jun 2018 Last revised: 12 Aug 2019
Date Written: February 1, 2019
Using matched employer-employee data from France, we uncover an ICT boom-cohort discount on the long-term wage of the large cohort of skilled workers entering in the Information and Communication Technology (ICT) sector during the late 1990s technology boom. Despite starting with 5% higher wages, these workers experience lower wage growth and end up with 6% lower wages fifteen years out, relative to similar workers who started outside the ICT sector. Other moments of the wage distribution are inconsistent with selection effects. These workers accumulate human capital early in their career that rapidly depreciates, implying that labor reallocation during technology booms can have long-lasting effects.
Keywords: Tech Bubble, Labor Misallocation
JEL Classification: E24, J24, O33
Suggested Citation: Suggested Citation