Date: 17 March 2023, Friday
Time: 13:30-14:30
Innovation Booms, Easy Financing, and Human Capital Accumulation
by
Johan Hombert
HEC Paris
This is an online seminar. To obtain event details please send a message to department.
Abstract: Innovation booms occur frequently and are often fueled by easy financing that allows new technology firms to pay high wages that attracts skilled labor. Using the late 1990s Information and Communication Technology (ICT) boom as a laboratory, we show that skilled labor joining this new sector experienced sizeable long-term earnings losses. We trace these losses to skill obsolescence, that cannot be explained by either selection or the subsequent ICT sector bust. During the boom, capital flowed more to firms whose workers would ultimately experience a larger productivity decline. This suggests that financial capital can amplify the negative effects of labor reallocation into booming sectors on aggregate labor productivity.