Adjusting to a New Technology: Experience and Training

46 Pages Posted: 10 Jul 2000

See all articles by Elhanan Helpman

Elhanan Helpman

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Antonio Rangel

California Institute of Technology

Multiple version iconThere are 2 versions of this paper

Date Written: May 1998

Abstract

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.

Suggested Citation

Helpman, Elhanan and Rangel, Antonio, Adjusting to a New Technology: Experience and Training (May 1998). NBER Working Paper No. w6551. Available at SSRN: https://ssrn.com/abstract=226284

Elhanan Helpman (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-4690 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Antonio Rangel

California Institute of Technology ( email )

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