TY - JOUR AU - Beaudry, Paul AU - Green, David A AU - Sand, Benjamin M TI - The Great Reversal in the Demand for Skill and Cognitive Tasks JF - National Bureau of Economic Research Working Paper Series VL - No. 18901 PY - 2013 Y2 - March 2013 DO - 10.3386/w18901 UR - http://www.nber.org/papers/w18901 L1 - http://www.nber.org/papers/w18901.pdf N1 - Author contact info: Paul Beaudry Bank of Canada 234 Wellington Street Ottawa, ON, K1A 0G9 CANADA E-Mail: Paul.Beaudry@ubc.ca David A. Green Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T1L4 Canada E-Mail: green@econ.ubc.ca Benjamin M. Sand Department of Economics York University Canada E-Mail: bmsand@yorku.ca M1 - published as Paul Beaudry, David A. Green, Benjamin M. Sand. "The Great Reversal in the Demand for Skill and Cognitive Tasks," in David Card and Alexandre Mas, organizers, "Labor Markets in the Aftermath of the Great Recession" Journal of Labor Economics, Volume 34, Number S1, part 2 (2016) AB - What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US. ER -