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http://ssrn.com/abstract=997991
 
 

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Labor Market Effects of Technology Shocks


Fabio Canova


Universitat Pompeu Fabra - Department of Economics and Business (DEB); European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); University of Southampton - Division of Economics; Centre for Economic Policy Research (CEPR)

J. David Lopez-Salido


Bank of Spain - Research Department; Centre for Economic Policy Research (CEPR)

Claudio Michelacci


Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR)

July 2007

Banco de España Research Paper No. WP-0719

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.

Number of Pages in PDF File: 68

Keywords: search frictions, technological progress, creative

JEL Classification: E00, J60, O33

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Date posted: July 3, 2007  

Suggested Citation

Canova, Fabio and Lopez-Salido, J. David and Michelacci, Claudio, Labor Market Effects of Technology Shocks (July 2007). Banco de España Research Paper No. WP-0719. Available at SSRN: http://ssrn.com/abstract=997991 or http://dx.doi.org/10.2139/ssrn.997991

Contact Information

Fabio Canova
Universitat Pompeu Fabra - Department of Economics and Business (DEB) ( email )
Barcelona, 08005
Spain
European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )
Via dei Roccettini 9
via delle Fontanelle 10
50016 San Domenico di Fiesole, Florence 50014
Italy
University of Southampton - Division of Economics
Southampton, SO17 1BJ
United Kingdom
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
J. David Lopez-Salido (Contact Author)
Bank of Spain - Research Department ( email )
Alcala 50
28014 Madrid
Spain
+34 91 338 5731 (Phone)
+34 91 338 5678 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Claudio Michelacci
Centre for Monetary and Financial Studies (CEMFI) ( email )
Casado del Alisal 5
28014 Madrid
Spain
+34 91 4290 551 (Phone)
+34 91 4291 056 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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