How career changes affect technological breakthrough - Reconsidering the prolonged slump of the Japanese economy -

This paper develops a simple overlapping-generations model that relates career choices of highly educated workers to the rate of technological progress over time. The paper shows that, in the recent period of technological breakthroughs, if workers either acquire a sufficiently large number of firm-specific skills under the long-term employment system, or if they acquire an insufficient number of general skills even though they go through a change of careers, then an economy will be trapped in a low rate of technological progress. This result obtains because, under these conditions, the proportion of multi-career workers in an economy is lower, and thus the knowledge arising from breakthrough technological industries does not spill over into other types of industries. This result is consistent with the considerable differences observed in the rate of technological progress between the United States and Japan since 1990s.