Adjusting to a new technology: Experience and training

How does the economy react to the arrival of a new major technology? The ex isting literature on general-purpose technologies (GPTs) has studied the ro le that mechanisms like secondary innovations, diffusion, and learning by f irms play in the adjustment process. By contrast, we focus on a new mechani sm: the interplay between technological change and two types of human capit al-technology-specific experience and education. We show that technological change that requires more education and training, like computerization, ne cessarily produces an initial slowdown. On the other hand, technological ch ange that lowers the training requirements, like the move from the artisan shop to the factory, can produce either a bust or a boom. We identify three key properties that determine the outcome: (1) the productivity of inexper ienced workers, (2) the speed with which experience raises productivity, an d (3) the level of general skills required to operate the new technology.