Abstract coming soon

Recent theory stresses the role of new job types (‘new work’) in counterbalancing the erosive effect of task-displacing automation on labor demand. Drawing on a novel inventory of eight decades of new job titles linked to United States Census microdata, we estimate that the majority of contemporary employment is found in new job tasks added since 1940 but that the locus of new task creation has shifted—from middle-paid production and clerical occupations in the first four post-WWII decades, to high-paid professional and, secondarily, low-paid services since 1980. We hypothesize that new tasks emerge in occupations where new innovations complement their outputs (‘augmentation’) or market size expands, while conversely, employment contracts in occupations where innovations substitute for labor inputs (‘automation’) or market size contracts. Leveraging proxies for output-augmenting and task-automating innovations built from a century of patent data and harnessing occupational demand shifts stemming from trade and demographic shocks, we show that new occupational tasks emerge in response to both positive demand shifts and augmenting innovations, but not in response to negative demand shifts or automation innovations. We document that the flow of both augmentation and automation innovations is positively correlated across occupations, yet these two faces of innovation have strongly countervailing relationships with occupational labor demand.

We construct occupation-specific indicators of technological change that span two centuries (1850-2010) using textual analysis of patent documents and occupation task descriptions. We find strong evidence that much of technical change has been displacive of labor during this period. Our occupation-level indices are significantly negatively correlated with future employment and wage growth; employment declines are especially pronounced among exposed occupations during innovation waves and around recessions. Aggregating at the industry level, our indices positively predict industry productivity and output but are associated with a decline in the labor share of output. Comparing the recent IT revolution to the Second Industrial Revolution (1880s) and the technology wave of the 1920s and 1930s, our measure uncovers an important difference—the first two waves consisted of innovations that were mainly related to occupations emphasizing (non-interpersonal) manual tasks, while the recent wave is composed of innovations that are significantly more related to cognitive tasks than the previous two waves.

Stocks with similar characteristics but different levels of ownership by financial institutions have returns and risk premia that comove very differently with shocks to the risk-bearing capacity of financial intermediaries. After accounting for observable stock characteristics, excess returns on more intermediated stocks have higher betas on contemporaneous shocks to intermediary willingness to take risk and are more predictable by state variables that proxy for intermediary health. The empirical evidence supports the predictions of asset pricing models featuring financial intermediaries as marginal investors who face frictions that induce changes in their risk-bearing capacity. This suggests that such models are useful for explaining price movements not only in markets for complex financial assets, but also within asset classes where households face comparatively low barriers to direct participation.