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Jobs and technology in general equilibrium: A three elasticities approach

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  • Venables, Anthony
  • Baldwin, Richard
  • Haaland, Jan I.

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.

Suggested Citation

  • Venables, Anthony & Baldwin, Richard & Haaland, Jan I., 2021. "Jobs and technology in general equilibrium: A three elasticities approach," CEPR Discussion Papers 15739, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15739
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    References listed on IDEAS

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    1. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    2. Xu, Bin, 2001. "Factor bias, sector bias, and the effects of technical progress on relative factor prices," Journal of International Economics, Elsevier, vol. 54(1), pages 5-25, June.
    3. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February.
    4. Haskel, Jonathan E. & Slaughter, Matthew J., 2002. "Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pages 1757-1783, December.
    5. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    6. Ronald W. Jones, 2000. "Technical Progress, Price Adjustments, and Wages," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 497-503, August.
    7. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    8. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
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    Cited by:

    1. Chrystalla Kapetaniou & Christopher A Pissarides, 2020. "Productive Robots and Industrial Employment: The role of national innovation systems," Discussion Papers 2023, Centre for Macroeconomics (CFM).
    2. Chrystalla Kapetaniou & Christopher A Pissarides, 2020. "Productive Robots and Industrial Employment: The role of national innovation systems," Discussion Papers 2023, Centre for Macroeconomics (CFM).
    3. Kerstin Hotte & Melline Somers & Angelos Theodorakopoulos, 2022. "Technology and jobs: A systematic literature review," Papers 2204.01296, arXiv.org.

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    More about this item

    Keywords

    Technical change; Wages; Employment; Factor intensity;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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