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Discussion Paper Details

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Title: Adjusting to a New Technology: Experience and Training

Author(s): Elhanan Helpman and Antonio Rangel

Publication Date: August 1998

Keyword(s): experience, New Technology, output adjustment and Training

Programme Area(s): International Trade and Regional Economics

Abstract: In this paper we study how aggregate output responds to the arrival of a new General Purpose Technology (GPT) by looking at adjustment mechanisms that operate through labour markets. We show that under a wide set of circumstances the arrival of a new GPT that raises long-run output can trigger a recession in the short run. Furthermore, we characterize features of the GPT that produce a cyclical adjustment path. An initial recession occurs whenever a higher education level is required to operate the new GPT. But a recession can also occur when the new GPT has lower educational requirements. A cyclical adjustment path is more likely when inexperienced workers are less productive with the new technology and the faster productivity rises with experience in the new sector.

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Bibliographic Reference

Helpman, E and Rangel, A. 1998. 'Adjusting to a New Technology: Experience and Training'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1930