Diffusion of new technologies and job creation
In this paper, Kalyani et al. investigate the diffusion of new technologies and job creation using a comprehensive textual analysis of patents, job postings, and earnings calls. In particular, the authors employ a novel methodology to identify phrases associated with new technologies through textual analysis of a) millions of patents filed between 1976 and 2014; b) 51 million job postings from 2010 to 2019; and c) hundreds of thousands of earnings conference calls from 2002 to 2019. This approach allows the authors to understand which new technologies affect jobs and businesses and to trace their diffusion across regions, industries, occupations, and firms. Their findings include:
- The development of economically impactful new technologies is highly geographically concentrated. Specifically, 56% of the most economically impactful technologies originate from just two U.S. locations: Silicon Valley and the Northeast Corridor (including New York, Boston, Washington D.C., and Philadelphia).
- As technologies mature, the number of related jobs grows and spreads geographically. However, this process is very slow, taking around 50 years to fully disperse across regions.
- The coefficient of variation of job shares across U.S. core-based statistical areas (CBSAs) falls by 18.5% in the first decade after a technology’s emergence, but full dispersion takes much longer.
- Initial hiring for new technologies is highly skill-biased, with 57.1% of early jobs requiring a college degree. This is significantly higher than the general workforce’s educational attainment.
- Over time, the mean skill level required for jobs associated with new technologies declines, broadening the range of workers who can fill these positions. Thirty years after a technology’s emergence, about 50.2% of related job postings still require a college degree.
- The spread of low-skill jobs associated with new technologies occurs faster than high-skill jobs. High-skill jobs tend to remain concentrated in the pioneer locations for decades.
- Pioneer locations retain a long-term advantage in high-skill job postings related to new technologies. This advantage persists for about four decades after the technology’s emergence.
- The persistence of this advantage is driven by the concentration of research, development, and production activities in these pioneer locations, while lower-skill jobs related to technology use spread more widely.
The Diffusion of New Technologies
Authors: Aakash Kalyani, Nicholas Bloom, Marcela Carvalho, Tarek Hassan, Josh Lerner, Ahmed Tahoun
From: Federal Reserve Bank of St. Louis, Stanford University, Harvard University, Boston University, London Business School
