Innovation Booms, Easy Financing, and Human Capital Accumulation

79 Pages Posted: 14 Jun 2018 Last revised: 9 Sep 2023

See all articles by Johan Hombert

Johan Hombert

HEC Paris - Finance Department

Adrien Matray

Princeton University

Multiple version iconThere are 3 versions of this paper

Date Written: September 7, 2023


Innovation booms are often fueled by easy financing that allows new technology firms to pay high wages that attracts skilled labor. Using the late 1990s Information and Communication Technology (ICT) boom as a laboratory, we show that skilled labor joining this new sector experienced sizeable long-term earnings losses. We show these earnings patterns are explained by faster skill obsolescence rather than either worker selection or the overall bust in the ICT sector. During the boom, financing flowed more to firms whose workers would experience the largest productivity declines, amplifying the negative effect of labor reallocation on aggregate human capital accumulation.

Keywords: Innovation booms; Dot-Com Bubble; Human Capital

Suggested Citation

Hombert, Johan and Matray, Adrien, Innovation Booms, Easy Financing, and Human Capital Accumulation (September 7, 2023). HEC Paris Research Paper No. FIN-2018-1294, Available at SSRN: or

Johan Hombert

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351

Adrien Matray (Contact Author)

Princeton University ( email )

Bendheim Center for Finance
26 Prospect Avenue
Princeton, NJ 08540
United States

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