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The labor market effects of technology shocks

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Author Info
Fabio Canova () (Universitat Pompeu Fabra)
David López-Salido () (Banco de España)
Claudio Michelacci () (Centro de Estudios Monetarios y Financieros (CEMFI))

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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.

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File URL: http://www.bde.es/informes/be/docs/dt0719e.pdf
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File Function: First version, July 2007
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Publisher Info
Paper provided by Banco de España in its series Banco de España Working Papers with number 0719.

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Length: 68 pages
Date of creation: Jul 2007
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Handle: RePEc:bde:wpaper:0719

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Keywords: search frictions technological progress creative destruction

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Find related papers by JEL classification:
E00 - Macroeconomics and Monetary Economics - - General - - - General
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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Cited by:
(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. Ravn, Morten O. & Simonelli, Saverio, 2007. "Labour Market Dynamics and the Business Cycle: Structural Evidence for the United States," CEPR Discussion Papers 6409, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Federico S. Mandelman & Francesco Zanetti, 2008. "Technology shocks, employment, and labor market frictions," Working Paper 2008-10, Federal Reserve Bank of Atlanta. [Downloadable!]
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