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Technology shocks and job flows

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  • Claudio Michelacci

    ()
    (CEMFI)

  • David López-Salido

    ()
    (Banco de España)

Abstract

We decompose the low-frequency movements in labour productivity into an investment-neutral and investment-specific technology component. We show that neutral technology shocks cause a short run increase in job creation and job destruction and leads to a reduction in aggregate employment. Investmentspecific technology shocks reduce job destruction, have mild effects on job creation and are expansionary. We construct a general equilibrium search model with neutral and investment-specific technological progress. We show that the model can replicate these findings if neutral technological progress is mainly embodied into new jobs, while investment-specific technological progress benefits (almost) equally old and new jobs. This provides evidence in favor of models where old jobs can (at least partially) reap the benefits of ongoing technological progress.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/03/Fic/dt0308e.pdf
File Function: First version, June 2003
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0308.

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Length: 85 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:bde:wpaper:0308

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Keywords: Search frictions; business cycle; creative destruction;

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