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Technology Boom, Labor Reallocation, and Human Capital Depreciation

Author

Listed:
  • Johan Hombert

    (HEC Paris)

  • Adrien Matray

    (Princeton University)

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

  • Johan Hombert & Adrien Matray, 2021. "Technology Boom, Labor Reallocation, and Human Capital Depreciation," Working Papers 2021-81, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2021-81
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    Keywords

    Labor; Employment; France;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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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