Institutional Affiliation: Washington University of St. Louis
|The Economics of Has-Beens|
with Michael Weisbach: w8464
Evolution of technology causes human capital to become obsolete. We study this phenomenon in an overlapping generations setting, assuming it is hard to predict how technology will evolve, and that older workers find updating uneconomic. Among our results is the proposition that (under certain conditions) a more rapid pace of technological advance is especially unfavorable to the old in the sense that the implied within-industry division of output or income between young and old becomes much more skewed, i.e., a smaller number of young earn comparatively more. We apply our results to architecture, an occupation in which the has-beens phenomenon has had a particularly acute impact.
Published: MacDonald, Glenn and Michael S. Weisbach. "The Economics Of Has-Beens," Journal of Political Economy, 2004, v112(2,Part2), S289-S310. citation courtesy of
with Boyan Jovanovic: w4463
The usual explanation for why the producers of a given product use different technologies involves "vintage-capital": A firm understands the frontier technology, but can still prefer an older, less efficient technology in which it has made specific physical and human capital investments. This paper develops an alternative. "information-barrier" hypothesis: Firms differ in the technologies they use because it is costly for them to overcome the informational barriers that separate them. The paper endogenizes both innovative and imitative effort. The industry life-cycle implications -- declining price and increasing output -- broadly agree with the Gort-Klepper data. Empirically, the paper focuses on the slow spread of Diesel locomotives, which can not be explained by the vintage-capital hypo...
Published: Journal of Political Economy, 102, no. 1, (February 1994), p. 24-52 citation courtesy of
|The Life-Cycle of a Competitive Industry|
with Boyan Jovanovic: w4441
Firm numbers first rise, and then fall as the typical industry evolves. This nonmonotonicity in the number of producers is explained in this paper using a competitive model in which innovation opportunities induce firms to enter, but in which a firm's failure to implement new technology causes it to exit. The model is estimated with data from the U.S. Automobile Tire Industry, a particularly dramatic example of the nonmonotonicity in firm numbers: A big shakeout took place during the 1920s. The number of automobiles sold in the U.S. does not appear to explain this shakeout. Instead, the data point to the invention of the Banbury mixer in 1916 as the event that caused the big exit wave. There were, of course, other major inventions in the tire industry, but none seems to have raised the opt...
Published: Journal of Political Economy, 102, no. 2, (April 1994) citation courtesy of
|Social Security and Consumer Spending in an International Cross Section|
with Robert J. Barro: r0025
Published: Barro, Robert J. and MacDonald, Glenn M. "Social Security and Consumer Spending in an International Cross Section." Journal of Public Economics, Vol. II, (1979).