nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2007‒07‒13
one paper chosen by
Rui Baptista
Technical University of Lisbon

  1. The labor market effects of technology shocks By Fabio Canova; David López-Salido; Claudio Michelacci

  1. By: Fabio Canova (Universitat Pompeu Fabra); David López-Salido (Banco de España; Centre for Economic Policy Research (CEPR)); Claudio Michelacci (Centro de Estudios Monetarios y Financieros (CEMFI))
    Abstract: We analyze the effects of neutral and investment-specific technology shocks on hours worked and unemployment. We characterize the response of unemployment in terms of job separation and job finding rates. We find that job separation rates mainly account for the impact response of unemployment while job finding rates for movements along its adjustment path. Neutral shocks increase unemployment and explain a substantial portion of unemployment and output volatility; investment-specific shocks expand employment and hours worked and mostly contribute to hours worked volatility. We show that this evidence is consistent with the view that neutral technological progress prompts Schumpeterian creative destruction, while investment specific technological progress has standard neoclassical features.
    Keywords: search frictions, technological progress, creative destruction
    JEL: E00 J60 O33
    Date: 2007–07

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