Phasing Out Occupations In A Market Economy

The notion that you have to pay people a premium to enter dying professions is a fascinating little insight.

We consider large, permanent shocks to individual occupations whose arrival date is uncertain. We are motivated by the advent of self-driving trucks, which will dramatically reduce demand for truck drivers. Using a bare-bones overlapping generations model, we examine an occupation facing obsolescence. We show that workers must be compensated to enter the occupation – receiving what we dub obsolescence rents – with fewer and older workers remaining in the occupation. We investigate the market for teamsters at the dawn of the automotive truck as an á propos parallel to truckers themselves, as self-driving trucks crest the horizon. As widespread adoption of trucks drew nearer, the number of teamsters fell, the occupation became ‘grayer’, and teamster wages rose, as predicted by the model.

Costas Cavounidis, Qingyuan Chai, Kevin Lang, and Raghav Malhotra, "Teamsters, Truckers, and Impending Innovations." NBER working paper (2023).