Finance Seminar with Lawrence Schmidt, MIT Sloan School of Management

On Friday, September 25, 2020, Lawrence Schmidt, MIT Sloan School of Management will be giving an online seminar on the paper: "Technological Innovation and Labor Income Risk"

Friday, September 25, 2020 - 14:30 to 15:30

The Department of Finance is proud to announce the upcoming online seminar with Lawrence Schmidt, MIT Sloan School of Management.

Lawrence Schmidt will present: 

Technological Innovation and Labor Income Risk

We examine the relation between technological progress and the riskiness of labor income. Motivated by a simple model of creative destruction, we draw a distinction between technological innovation advanced by the firm, or its competitors. Using administrative data from the United States, we find that own firm innovation is associated with a modest increase in worker earnings growth, while innovation by competing firms is related to lower future worker earnings. Importantly, these earnings changes are asymmetrically distributed across workers: both gains and losses are concentrated on a subset of workers, which implies that the distribution of worker earnings growth rates becomes more right- or left-skewed following innovation by the firm, or its competitors, respectively. These effects are particularly strong for the highest-paid workers. Our results therefore suggest innovation is associated with a substantial increase in the labor income risk, especially for workers at the top of the earnings distribution. Our simulations reveal that the increased disparity in innovation outcomes across firms in the 1990s can account for a significant part of the recent rise in income inequality.

PDF icon Find the paper here.

Location and sign up:
This is an online seminar on Zoom.
Please contact us in order to sign up.

The page was last edited by: Department of Finance // 04/04/2022