Technology Boom, Labor Reallocation, and Human Capital Depreciation

60 Pages Posted: 14 Jun 2018 Last revised: 18 Jan 2022

See all articles by Johan Hombert

Johan Hombert

HEC Paris - Finance Department

Adrien Matray

Princeton University

Multiple version iconThere are 2 versions of this paper

Date Written: December 20, 2021

Abstract

During the late 1990s boom, one-third of skilled labor market entrants joined the Information and Communication Technology (ICT) sector. We use French linked employer-employee data to study their wage dynamics. 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 in other sectors. The long-run wage discount is not explained by selection, job losses or persistently low demand for ICT services. It is concentrated in high-skill occupations, consistent with obsolescence of technical skills accelerating during a technological boom.

Suggested Citation

Hombert, Johan and Matray, Adrien, Technology Boom, Labor Reallocation, and Human Capital Depreciation (December 20, 2021). HEC Paris Research Paper No. FIN-2018-1294, Available at SSRN: https://ssrn.com/abstract=3187093 or http://dx.doi.org/10.2139/ssrn.3187093

Johan Hombert

HEC Paris - Finance Department ( email )

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

Adrien Matray (Contact Author)

Princeton University ( email )

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

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