Occupational Exposure to Capital-Embodied Technical Change

We study differences in exposure to factor-biased technical change among occupations by providing the first measures of capital -em-bodied technical change (CETC) and of the elasticity of substitution between capital and labor at the occupational level. We document siz-able occupational heterogeneity in both measures, but quantitatively, it is the heterogeneity in factor substitutability that fuels workers' exposure to CETC. In a general equilibrium model of worker sorting across occupations, CETC accounts for almost all of the observed labor reallocation in the US between 1984 and 2015. Absent occu-pational heterogeneity in factor substitutability, CETC accounts for only 17 percent of it (JEL I26, J16, J24, J31, O33)