Jobs and technology in general equilibrium: A three-elasticities approach

The impact of technological progress on jobs and wages has been subject to much empirical and some theoretical work e.g. on skill-biased technical progress. Most of this literature has focused on two causal channels; the jobs-displacing substitution effect, and the job-creating demand effect. This paper shows that a further channel shapes the quantitative and qualitative effects of technical change. This is a general-equilibrium effect, depending on the interplay between the factors and sectors impacted by change. The paper integrates these three channels and derives explicit expressions for the effects of different types of technical change on wages and sectoral employment.