I am eager to explore this question and welcome thoughtful discussion. My current understanding is as follows: When institutions change—throughnew rules, regulations, or policies—skills that were valuable under previous institutional frameworks can become obsolete, as they were specifically tailored to those earlier conditions. Consequently, demand for different skills is reconfigured. Because institutional change often occurs faster than the workforce can adjust its skills, this creates a mismatch between labor supply and demand, resulting in market disequilibrium. This disequilibrium persists as the adjustment of skills lags behind the pace of institutional change. The reconfiguration of demand and the ensuing disequilibrium lead to a reordering of marginal returns to skills and a redistribution of welfare. Some groups bear the costs associated with skill devaluation, while others benefit from the new rules.
I have developed these ideas further in a working paper posted on SSRN:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5335021
