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Title: Occupational exposure to capital-embodied technology
Citation Type: Miscellaneous
Publication Year: 2019
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Abstract: What is the effect of technological change on wage inequality and labor market allocations? In this paper, we explore the relationship between technological advancement, labor alloca- tions across occupations and differential returns to workers of heterogeneous education by building measures of capital-embodied technological change (CETC) at the occupation level. We construct quality-adjusted equipment stocks for each occupation based off of a novel dataset of tools’ requirements linked to NIPA equipment stocks. We document substantial heterogeneity in the bundle of capital goods used by different occupations and in their ex- posure to technological change, as measured by the decay in the quality-adjusted relative price of investment of each occupational bundle. Then we link this exposure to observed patterns of labor reallocation across occupations and the skill-premia through a structural model of occupational choice with heterogeneous workers, capital and occupations. Con- sistently with the narrative in the literature, our results indicate that CETC in computers and communication equipment have been important drivers of the returns to skill in the last 40 years. However, CETC in broader equipment categories including service industry machinery and medical equipment explains the bulk of the increase. At the same time, we show that CETC has had heterogeneous effects in labor reallocation across occupations and education groups. For example, absent CETC, we should have observed raising labor shares in administrative services relative to the loss in employment observed in the data and lower increases in the share of professionals in the population. We argue that this heterogeneity is consistent with occupation-specific elasticities of substitution between capital and labor, which we also estimate from the data.
Url: https://sistemas.colmex.mx/Reportes/LACEALAMES/LACEA-LAMES2019_paper_744.pdf
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Authors: Caunedo, Julieta; Jaume, David; Keller, Elisa
Publisher: Institute of Social Sciences at Cornell University
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
Countries: United States