Technology and jobs: secular changes and cyclical dynamics

In this paper, we exploit plant-level data for U.S. manufacturing for the 1970s and 1980s to explore the connections between changes in technology and the structure of employment and wages. We focus on the nonproduction labor share (measured alternatively by employment and wages) as the variable of interest. Our main findings are summarized as follows: (i) aggregate changes in the nonproduction labor share at annual and longer frequencies are dominated by within-plant changes; (ii) the distribution of annual within-plant changes exhibits a spike at zero, tremendous heterogeneity and fat left and right tails; (iii) within-plant secular changes are concentrated in recessions; and (iv) while observable indicators of changes in technology account for a significant fraction of the secular increase in the average nonproduction labor share, unobservable factors account for most of the secular increase, most of the cyclical variation, and most of the cross-sectional heterogeneity.