Technological Change, Relative Worker Productivity, and Firm-Level Substitution

In this article, we examine the effect, on players, of a change in the technology for scoring points in the NBA, the introduction of the three-point line. While a naive prediction about the impact of this change suggests that it would disproportionately raise the productivity and value of guards who are more likely to shoot the ball from behind the three-point line, we show in a simple model that the strategic response of the defense leads the three-point line to increase the relative productivity of players who are more likely to shoot closer to the basket. We provide evidence that centers and forwards experienced increases in relative productivity with the introduction of the three-point line. Finally, we present evidence that the labor market in the NBA adjusted by increasing the demand for height in the NBA draft. Our results highlight the potential for strategic adjustments to affect the bias of technological change.