Technology Boom, Labor Reallocation, and Human Capital Depreciation

57 Pages Posted: 14 Jun 2018 Last revised: 26 Mar 2020

See all articles by Johan Hombert

Johan Hombert

HEC Paris - Finance Department

Adrien Matray

Princeton University

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Date Written: February 25, 2018

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 STEM 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 (February 25, 2018). 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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