Monday, April 01, 2013

The Great Reversal

"The first object of this paper will be to document that the demand for cognitive tasks has actually been declining since 2000." 
In their disturbing study, three Canadian economists meet that objective: they document the Great Reversal in labor force demand for cognitive workers (managerial, professional, and technical), which began in 2000. They are the first to do so. Other researchers missed the turning point because, through much of the 2000s, the Great Reversal was masked by the frenzy of the housing bubble.

The cause of the Great Reversal is the widespread adoption of technologies that are substituting for educated workers. With more cognitive workers than jobs available, highly-educated workers have been muscling the less educated into lower-skill and lower-wage jobs or pushing them out of the labor force entirely. Which brings us to the current situation as the researchers describe it: "Having a BA is less about obtaining access to high paying managerial and technology jobs and more about beating out less educated workers for the Barista or clerical job."

Nowhere in their paper does the word "Internet" appear. But it is clear that the Internet is the "one underlying force" behind the paradigm shift that began in 2000.

Source: National Bureau of Economic Research, The Great Reversal in the Demand for Skill and Cognitive Tasks, © Paul Beaudry, David A. Green, and Benjamin M. Sand, NBER Working Paper 18901 ($5)

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