The Death of a Technical Skill

We analyze how the decline of a technology affects online labor market dynamics. We evaluate the effects of Steve Jobs’ announcement that Apple would no longer support Adobe Flash—a popular set of tools for creating internet applications. Despite a precipitous decline in Flash demand, there is no evidence of a reduction in Flash wages on this platform because the supply response was rapid, particularly among younger developers with readily available “fallback” skills. The key to this rapid adjustment was that the long-run value of the skills that developers expected to acquire on the job acted as a form of nonwage compensation that suddenly fell in its expected value, motivating many developers to switch to other technologies, even though wages themselves did not fall. Our findings underscore how the rise and fall of technologies influences matching in online markets and help to explain (i) why technological obsolescence leaves fewer, older participants in a skill and (ii) why technologies in decline can be contemporaneously characterized by wages that stay flat or even rise in a market setting. Management and policy implications are discussed.

History: Bin Gu, Senior Editor; Mohammad Rahman, Associate Editor.

Funding: This work was supported by the W.E. Upjohn Institute for Employment Research and the Alfred P. Sloan Foundation [Grant G-2012-10-23].

Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.0709.