Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACT Routine-biased technological change (RBTC), whereby routine-task jobs are replaced by machines and overseas labor, shifts demand towards high-and low-skill jobs, resulting in job polarization of the U.S. labor market. We test whether recessions accelerate this process. In doing so we establish a new fact about the demand for skill over the business cycle. Using a new database containing the near-universe of electronic job vacancies that span the Great Recession, we find evidence of upskilling-firms demanding more-skilled workers when local employment growth is slower. We find that upskilling is sizable in magnitude and largely due to changes in skill requirements within firm-occupation cells. We argue that upskilling is driven primarily by firm restructuring of production towards more-skilled workers. We show that 1) skill demand remains elevated after local economies recover from the Great Recession, driven primarily by the same firms that upskilled early in the recovery; 2) among publicly traded firms in our data, those that upskill more also increase capital stock by more over the same time period; and 3) upskilling is concentrated within routine-task occupations-those most vulnerable to RBTC. Our result is unlikely to be driven by firms opportunistically seeking to hire more-skilled workers in a slack labor market, and we rule out other cyclical explanations. We thus present the first direct evidence that the Great Recession precipitated new technological adoption. Terms of use: Documents in JEL Classification Codes: D22, E32, J23, J24, M51, O33Key Words: Job polarization, job postings, RBTC, recessions, routine-biased technological change, upskilling, vacancies Acknowledgments:We are grateful to Jason Abaluck, Joe Altonji, David Autor, Tim Bartik, David Berger, Jeff Clemens, David Deming, David Green, John Horton, Fabian Lange, Steve Malliaris, Alicia Sasser Modestino, Daniel Shoag, Henry Siu, Basit Zafar, and seminar participants at the AEAs, the Atlanta Fed, Brookings, Harvard, LSE, MIT, Princeton, Rutgers, the SOLE/EALE 2015 meetings, the Trans Pacific Labor Seminar 2015, University of British Columbia, and University of South Florida. We are especially indebted to Dan Restuccia, Jake Sherman, and Bledi Taska for providing the Burning Glass data. Jing Cai provided excellent research assistance with CPS data. A previous version of this paper was titled "Is College the New High School? Evidence from Vacancy Postings." Routine-biased technol...

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