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Pace versus Type: The Effect of Economic Growth on Unemployment and Wage Patterns

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Author Info
Martine Carre (Universite de Caen)
David Drouot (Universite d'Evry Val d'Essonne)

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Abstract

Much of the literature on growth and unemployment has emphasized the effect of the increasing pace of technological progress on job instability and wage inequality. But less attention has been placed on how the changes in the very nature of work, due to technical change, affects the rate of job destruction, and hence the level of unemployment. We argue that technological progress modifies on-the-job learning and, through general equilibrium effects, unemployment and wage dispersion. In the context of the canonical Mortensen and Pissarides [1998] model, we show that, in a routine world, this 'on-the-job learning effect' can offset the creative destruction effect induced by an increase in the pace of technological change on unemployment, whereas it can amplify it as jobs become less routine. Moreover, the relationship between wage dispersion and growth can be non monotone. This finding helps explain the wage compression/expansion observed in time series data. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2003.12.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 7 (2004)
Issue (Month): 3 (July)
Pages: 737-757
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Handle: RePEc:red:issued:v:7:y:2004:i:3:p:737-757

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  3. Galor, O. & Tsiddon, D., 1996. "Technological Progress, Mobility and Economic Growth," Papers 13-96, Tel Aviv.
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  4. Lindbeck, Assar & Snower, Dennis J, 2000. "Multitask Learning and the Reorganization of Work: From Tayloristic to Holistic Organization," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 353-76, July. [Downloadable!] (restricted)
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  5. Aghion, Philippe & Howitt, Peter & Violante, Giovanni L, 2000. "General Purpose Technology and Within-Group Inequality," CEPR Discussion Papers 2474, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 477-94, July. [Downloadable!] (restricted)
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  7. Fabien Postel-Vinay, 2002. "The Dynamics of Technological Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 737-760, August. [Downloadable!] (restricted)
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  8. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, vol. 63(2), pages 346-369, August. [Downloadable!] (restricted)
  9. Daron Acemoglu, 2002. "Cross-Country Inequality Trends," NBER Working Papers 8832, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Giovanni L. Violante, 2000. "Technological Acceleration, Skill Transferability and the Rise in Residual Inequality," ILR working papers 063, Institute for Labour Research. [Downloadable!]
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  11. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-94, October. [Downloadable!] (restricted)
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  12. Jovanovic, B. & Nyarko, Y., 1996. "Learning by Doing and the Choice of Technology," Working Papers 96-25, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
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  13. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-83, August. [Downloadable!] (restricted)
  14. Laing, Derek & Palivos, Theodore & Wang, Ping, 1995. "Learning, Matching and Growth," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 115-29, January. [Downloadable!] (restricted)
  15. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
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  16. Maurin, Eric & Thesmar, David, 2003. "Changes in the Functional Structure of Firms and the Demand for Skill," CEPR Discussion Papers 3831, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  17. Huw Lloyd-Ellis, 1999. "Endogenous Technological Change and Wage Inequality," American Economic Review, American Economic Association, vol. 89(1), pages 47-77, March. [Downloadable!] (restricted)
  18. Dale T. Mortensen & Christopher A. Pissarides, 1998. "Technological Progress, Job Creation and Job Destruction," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(4), pages 733-753, October. [Downloadable!] (restricted)
  19. Lindbeck, Assar & Snower, Dennis J., 2001. "Centralized bargaining and reorganized work: Are they compatible?," European Economic Review, Elsevier, vol. 45(10), pages 1851-1875, December. [Downloadable!] (restricted)
  20. Laing, Derek & Palivos, Theodore & Wang, Ping, 2003. "The economics of 'new blood'," Journal of Economic Theory, Elsevier, vol. 112(1), pages 106-156, September. [Downloadable!] (restricted)
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  21. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March. [Downloadable!] (restricted)
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  22. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  23. Givord, Pauline & Maurin, Eric, 2003. "Changes in Job Security and their Causes: An Empirical Analysis for France, 1982-2002," CEPR Discussion Papers 3830, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis. [Downloadable!]
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