Fact of the Week: Average Pay for Job Postings Involving a New Technology Decreases 15 Percent in the First Decade, Showing How Technologies Spread From High-Skilled to Lower-Skilled Occupations

Source: Bloom, et. al, “The Diffusion of Disruptive Technologies,” NBER Working Paper Series, July 2021.

Commentary: The complexity and speed by which new technologies emerge can create a false impression that only high-skilled highly educated workers use them. But a recent study from the National Bureau of Economic Research (NBER) challenges this assumption by analyzing trends in the dissemination of new technology. NBER finds that within their first decade of a disruptive new technology’s invention and adoption, the average incomes of workers hired for jobs that use the technology drops by 15 percent as adoption of the technology spreads from a few comparatively high-skill occupations to more and lower-skill occupations.

New technologies also diffuse geographically. While innovations may tend to be introduced most frequently in a handful of urban areas—indeed, NBER analyzed patent data and found that locations in California alone comprise roughly 40 percent of U.S. innovation hubs—the technologies quickly make their way to the rest of the country: The variation between U.S. core-based statistical areas for new jobs demanding workers to use at least one disruptive technology falls by 24 percent after the first decade.