Private Incentives for Specialization in a Changing and Unpredictable Labor Market ()
Abstract
Technological change is a distinctive characteristic of modern labor
markets. New technologies change the demand for different skills in the labor
market and thus introduce uncertainty in the wage structure that agents will
face in the future. In this way, technological change affects agents decisions
about which skills to invest in. In this paper, I study how labor market
uncertainty arising from technological change influences the private incentives
for specialization. I show that in a world populated by risk-averse agents,
technologies that generate a positive covariance of wages across sectors or
tasks within sectors will strengthen the incentives for specialization, whereas
technological progress that generates a negative covariance of wages will generate
strong private incentives for agents to become generalists. Therefore, there is
no unique relationship between technological progress and specialization. The
nature of the new technologies introduced in the labor market is what matters.
Share and Cite:
Parro, F. (2015) Private Incentives for Specialization in a Changing and Unpredictable Labor Market.
Theoretical Economics Letters,
5, 163-168. doi:
10.4236/tel.2015.52020.
Conflicts of Interest
The authors declare no conflicts of interest.
References
|
[1]
|
Rosen, S. (1983) Specialization and Human Capital. Journal of Labor Economics, 1, 43-49.
http://dx.doi.org/10.1086/298003
|
|
[2]
|
Baumgartner, J.R. (1988) Physicians Services and the Division of Labor across Local Markets. Journal of Political Economy, 96, 948-982.
http://dx.doi.org/10.1086/261571
|
|
[3]
|
Kim, S. (1989) Labor Specialization and the Extent of the Market. Journal of Political Economy, 97, 692-705.
http://dx.doi.org/10.1086/261622
|
|
[4]
|
Becker, G.S. and Murphy, K.M. (1992) The Division of Labor, Coordination Costs, and Knowledge. Journal of Political Economy, 107, 1137-1160.
http://dx.doi.org/10.2307/2118383
|
|
[5]
|
Autor, D.H., Levy, F. and Murnane, R.J. (2003) The Skill Content of Recent Technological Change: An Empirical Investigation. Quarterly Journal of Economics, 118, 1279-1333.
|
|
[6]
|
Autor, D.H., Katz, L.F. and Kearney, M.S. (2006) The Polarization of the US Labor Market. American Economic Review, 96, 189-194.
|
|
[7]
|
Goos, M. and Manning, A. (2007) Lousy and Lovely Jobs: The Rising Polarization of Work in Britain. Review of Economics and Statistics, 89, 118-133.
http://dx.doi.org/10.1162/rest.89.1.118
|
|
[8]
|
Acemoglu, D. and Autor, D.H. (2010) Skills, Tasks and Technologies: Implications for Employment and Earnings. National Bureau of Economic Research Working Paper 16082, Cambridge.
|