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Investment-specific technical progress, capital obsolescence and job creation

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  • del Rio, Fernando
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    Abstract

    This paper shows that faster disembodied technological progress - if it is investment-specific - might reduce job creation because the obsolescence cost of capital increases, which reduces the net return of a job. This effect could be called the obsolescence effect. It is also shown that the increase in the rate of decline of the U.S. relative price of investment - which can be used as a proxy for the rate of investment-specific technical progress - may have increased the obsolescence costs of capital, which might account for the observed fall in U.S. vacancy-unemployment ratios and job finding rates after the mid-seventies.

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    File URL: http://www.sciencedirect.com/science/article/B6VFD-4XCJ4KS-1/2/5af1680eedd03ed09da31341d1ca8859
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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 17 (2010)
    Issue (Month): 1 (January)
    Pages: 248-257

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    Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:248-257

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    Web page: http://www.elsevier.com/locate/labeco

    Related research

    Keywords: Unemployment Job creation Matching Investment-specific technical progress Obsolescence;

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