Technological Displacement with Selection Bias

When new technology can perform existing work, companies tend to eliminate employees with the highest relative cost and lowest relative value—not necessarily the weakest performers, but those whose marginal value is most easily displaced during the technology transition. Junior employees appear cheap but are inefficient with new technology, while senior employees command higher salaries but possess business expertise advantages. This creates a paradox where junior employees often become the first casualties of displacement, despite their lower costs.

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