Sunday, March 31, 2013

Provocative New Research About the Labor Market

This is new and different, but it kind of fits into perceptions of what’s wrong with the labor market:

… But in a paper released Monday by the National Bureau of Economic Research, a team of Canadian economists argues that the U.S. faces a longer-term problem.

They found that unlike the 1990s, when companies needed hundreds of thousands of skilled workers to develop, build and install high-tech systems—everything from corporate intranets to manufacturing robots—demand for such skills has fallen in recent years, even as young people continued to flock to programs that taught them.

"Once the robots are in place you still need some people, but you need a lot less than when you were putting in the robots," said Paul Beaudry, an economist at the University of British Columbia …

So, part of what we’re seeing is a mismatch between demand and supply:

But using Labor Department data, Mr. Beaudry and his coauthors found that demand for college-level occupations—primarily managers, professionals and technical workers—peaked as a share of the workforce in about 2000, just as the dot-com bubble was about to burst, and then began to decline. The supply of such workers, meanwhile, continued to grow through the 2000s.

Read the whole thing, entitled “College Grads May Be Stuck in Low-Skill Jobs” in the March 26 issue of The Wall Street Journal.

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