Technology-Skill Complementarity and Labor Displacement: Evidence from Linking Two Centuries of Patents with Occupations

93 Pages Posted: 6 May 2020 Last revised: 7 Dec 2021

See all articles by Leonid Kogan

Leonid Kogan

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Dimitris Papanikolaou

Northwestern University - Kellogg School of Management - Department of Finance; National Bureau of Economic Research (NBER)

Lawrence Schmidt

MIT Sloan School of Management

Bryan Seegmiller

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: December 26, 2019

Abstract

We construct new technology indicators using textual analysis of patent documents and occupation task descriptions that span of two centuries (1850--2010). At the industry level, improvements in technology are associated with higher labor productivity but a decline in the labor share. Exploiting variation in the extent certain technologies are related to specific occupations, we show that technological innovation has been largely associated with worse labor market outcomes---wages and employment---for incumbent workers in related occupations using a combination of public-use and confidential administrative data. Panel data on individual worker earnings reveal that less educated, older, and more highly-paid workers experience significantly greater declines in average earnings and earnings risk following related technological advances. We reconcile these facts with the standard view of technology-skill complementarity using a model that allows for skill displacement.

Suggested Citation

Kogan, Leonid and Papanikolaou, Dimitris and Schmidt, Lawrence and Seegmiller, Bryan, Technology-Skill Complementarity and Labor Displacement: Evidence from Linking Two Centuries of Patents with Occupations (December 26, 2019). Available at SSRN: https://ssrn.com/abstract=3585676 or http://dx.doi.org/10.2139/ssrn.3585676

Leonid Kogan

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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National Bureau of Economic Research (NBER)

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Dimitris Papanikolaou (Contact Author)

Northwestern University - Kellogg School of Management - Department of Finance ( email )

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National Bureau of Economic Research (NBER) ( email )

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Lawrence Schmidt

MIT Sloan School of Management ( email )

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Bryan Seegmiller

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

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