Technological Progress, On-the-Job Search, and Unemployment

ISER Discussion Paper No. 734

54 Pages Posted: 1 Jul 2009

See all articles by Hiroaki Miyamoto

Hiroaki Miyamoto

International University of Japan

Yuya Takahashi

University of Wisconsin-Madison - Department of Economics

Institute of Social and Economic Research

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: April 15, 2009

Abstract

This paper studies the impact of long-run productivity growth on job finding and separation rates, and thus the unemployment rate, using a search and matching model. We incorporate disembodied technological progress and on-the-job search into the endogenous job separation model of Mortensen and Pissarides (1994). The incorporation of on-the-job search allows faster growth to reduce unemployment by decreasing the separation rate and inducing job creation. We demonstrate that introducing on-the-job search substantially improves the ability of the Mortensen and Pissarides model to explain the impact of growth on unemployment. Our quantitative analysis shows that our model increases the magnitude of the negative impact of growth on unemployment compared to the standard matching model with disembodied technological progress.

Keywords: Growth, Unemployment, Search-matching model, On-the-job search

JEL Classification: E24, J64, O40

Suggested Citation

Miyamoto, Hiroaki and Takahashi, Yuya and Economic Research, Institute of Social and, Technological Progress, On-the-Job Search, and Unemployment (April 15, 2009). ISER Discussion Paper No. 734, Available at SSRN: https://ssrn.com/abstract=1382682 or http://dx.doi.org/10.2139/ssrn.1382682

Hiroaki Miyamoto (Contact Author)

International University of Japan

777 Kokusai-cho
Minami Uonuma-shi, Niigata, 949-7277
Japan

Yuya Takahashi

University of Wisconsin-Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States

Institute of Social and Economic Research

Osaka University - Institute of Social and Economic Research (ISER)

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
81-6-6879-8555 (Phone)
81-6-6879-8583 (Fax)

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