The Economics of Has-Beens
34 Pages Posted: 10 Sep 2001 Last revised: 24 Oct 2010
Date Written: September 2001
Evolution of technology causes human capital to become obsolete. We study this phenomenon in an overlapping generations setting, assuming it is hard to predict how technology will evolve, and that older workers find updating uneconomic. Among our results is the proposition that (under certain conditions) a more rapid pace of technological advance is especially unfavorable to the old in the sense that the implied within-industry division of output or income between young and old becomes much more skewed, i.e., a smaller number of young earn comparatively more. We apply our results to architecture, an occupation in which the has-beens phenomenon has had a particularly acute impact.
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