Jobs and technology in general equilibrium: A three-elasticities approach

31 Pages Posted: 22 Jan 2021

See all articles by Richard Baldwin

Richard Baldwin

Graduate Institute, Geneva; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jan I. Haaland

Norwegian School of Economics (NHH) - Department of Economics; Centre for Economic Policy Research (CEPR)

Anthony J. Venables

University of Oxford; Centre for Economic Policy Research (CEPR)

Date Written: January 21, 2021

Abstract

The impact of technological progress on jobs and wages has been subject to much empirical and some theoretical work. However, most of this literature has not addressed the general equilibrium interplay between the productive factors that are affected, the sectors in which these factors are used, and the consequent changes in the structure of employment and factor returns. This paper draws on tools from general equilibrium trade theory to provide an integrated approach to these issues. The analysis centres around three key elasticities linking technological change to jobs – the jobs-displacing substitution effect, the job-creating demand effect, and the general-equilibrium effects, through which factors are reallocated between sectors. The results highlight the role of relative factor intensities and the importance of openness in determining the effects of technology on jobs, wages, and structural change. The implications of interaction between non-tradable and tradable sectors are analysed.

Keywords: Technical change, wages, employment, factor intensity

JEL Classification: F11, F16, J30, O33

Suggested Citation

Baldwin, Richard and Haaland, Jan I. and Venables, Anthony J., Jobs and technology in general equilibrium: A three-elasticities approach (January 21, 2021). NHH Dept. of Economics Discussion Paper No. 02/2021, Available at SSRN: https://ssrn.com/abstract=3771118 or http://dx.doi.org/10.2139/ssrn.3771118

Richard Baldwin

Graduate Institute, Geneva ( email )

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jan I. Haaland (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
Bergen, N-5045
Norway
+4755959255 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Anthony J. Venables

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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