The Great Reversal in the Demand for Skill and Cognitive Tasks

72 Pages Posted: 22 Mar 2013 Last revised: 22 Feb 2021

See all articles by Paul Beaudry

Paul Beaudry

University of British Columbia (UBC) - Vancouver School of Economics; National Bureau of Economic Research (NBER)

David A. Green

University of British Columbia (UBC) - Department of Economics

Benjamin Sand

University of British Columbia (UBC) - Department of Economics

Date Written: March 2013

Abstract

What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US.

Suggested Citation

Beaudry, Paul and Green, David Alan and Sand, Benjamin M., The Great Reversal in the Demand for Skill and Cognitive Tasks (March 2013). NBER Working Paper No. w18901, Available at SSRN: https://ssrn.com/abstract=2237814

Paul Beaudry (Contact Author)

University of British Columbia (UBC) - Vancouver School of Economics ( email )

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National Bureau of Economic Research (NBER)

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David Alan Green

University of British Columbia (UBC) - Department of Economics ( email )

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604-822-5915 (Fax)

Benjamin M. Sand

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

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