Effects of Productivity Shocks on Employment: UK Evidence (revised 25 February 2013)
AbstractWe provide evidence that positive industry-level productivity shocks cause employment to fall in the short run in the UK economy. We use a new UK industry data(over the period 1970-2000), which covers both manufacturing and non-manufacturing industries, and identify productivity shocks using long-run restrictions and structural vector autoregression methodology. Our findings show that the unconditional correlation between growth rates of productivity and employment (measured as hours-worked)is negative in almost all the industries, and the correlation conditional on productivity shocks is negative in over three-quarters of the industries. After a positive productivity shock, short-run employment falls in 26 of the 31 industries. The findings at the aggregate level are consistent with those at industry level. We note some striking differences in comparison to the recent US literature and consider potential sources that may help account for the contractionary effects of positive productivity shocks in the UK.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 11-05.
Length: 23 pages
Date of creation: 25 May 2011
Date of revision: 25 Feb 2013
Publication status: Published: Carleton Economic Papers
Contact details of provider:
Postal: 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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.:
- Michelle Alexopoulos, 2004.
"Read All About it: What happens following a technology shock,"
2004 Meeting Papers
56, Society for Economic Dynamics.
- Michelle Alexopoulos, 2011. "Read All about It!! What Happens Following a Technology Shock?," American Economic Review, American Economic Association, vol. 101(4), pages 1144-79, June.
- Michelle Alexopoulos, 2010. "Read All About it!! What happens following a technology shock?," Working Papers tecipa-391, University of Toronto, Department of Economics.
- Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003.
"What Happens After a Technology Shock?,"
NBER Working Papers
9819, National Bureau of Economic Research, Inc.
- Christopher J. Erceg & Luca Guerrieri, 2004.
"Can Long-Run Restrictions Identify Technology Shocks?,"
Computing in Economics and Finance 2004
3, Society for Computational Economics.
- Christopher J. Erceg & Luca Guerrieri & Christopher Gust, 2005. "Can Long-Run Restrictions Identify Technology Shocks?," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1237-1278, December.
- Christopher Erceg & Luca Guerrieri & Christopher Gust, 2004. "Can long-run restrictions identify technology shocks?," International Finance Discussion Papers 792, Board of Governors of the Federal Reserve System (U.S.).
- Charlotta Groth, 2008. "Quantifying UK Capital Adjustment Costs," Economica, London School of Economics and Political Science, vol. 75(298), pages 310-325, 05.
- Jordi GalÃ & Pau Rabanal, 2004. "Technology Shocks and Aggregate Fluctuations," IMF Working Papers 04/234, International Monetary Fund.
- Yongsung Chang & Jay H. Hong, 2006.
"Do Technological Improvements in the Manufacturing Sector Raise or Lower Employment?,"
American Economic Review,
American Economic Association, vol. 96(1), pages 352-368, March.
- Yongsung Chang & Jay H. Hong, 2005. "Do technological improvements in the manufacturing sector raise or lower employment?," Working Papers 05-5, Federal Reserve Bank of Philadelphia.
- Yongsung Chang & Jay H. Hong, 2005. "Do technological improvements in the manufacturing sector raise or lower employment?," Working Paper 05-02, Federal Reserve Bank of Richmond.
- Susanto Basu & John Fernald & Miles Kimball, 2004.
"Are Technology Improvements Contractionary?,"
NBER Working Papers
10592, National Bureau of Economic Research, Inc.
- Susanto Basu & John Fernald & Miles Kimball, 2004. "Are technology improvements contractionary?," Working Paper Series WP-04-20, Federal Reserve Bank of Chicago.
- Susanto Basu & John Fernald & Miles Kimball, 1998. "Are technology improvements contractionary?," International Finance Discussion Papers 625, Board of Governors of the Federal Reserve System (U.S.).
- Susanto Basu & John Fernald & Miles Kimball, 2002. "Are Technology Improvements Contractionary?," Harvard Institute of Economic Research Working Papers 1986, Harvard - Institute of Economic Research.
- Michelle Alexopoulos & Jon Cohen, 2009.
"Measuring Our Ignorance, One Book at a Time: New Indicators of Technological Change, 1909-1949,"
tecipa-349, University of Toronto, Department of Economics.
- Alexopoulos, Michelle & Cohen, Jon, 2009. "Measuring our ignorance, one book at a time: New indicators of technological change, 1909-1949," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 450-470, May.
- Jon Faust & Eric M. Leeper, 1994.
"When do long-run identifying restrictions give reliable results?,"
International Finance Discussion Papers
462, Board of Governors of the Federal Reserve System (U.S.).
- Faust, Jon & Leeper, Eric M, 1997. "When Do Long-Run Identifying Restrictions Give Reliable Results?," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 345-53, July.
- Jon Faust & Eric M. Leeper, 1994. "When do long-run identifying restrictions give reliable results?," Working Paper 94-2, Federal Reserve Bank of Atlanta.
- Nicholas Oulton & Sylaja Srinivasan, 2005. "Productivity growth in UK industries, 1970-2000: structural change and the role of ICT," Bank of England working papers 259, Bank of England.
- Hashmat Khan & John Tsoukalas, 2005. "Technology Shocks and UK Business Cycles," Macroeconomics 0512006, EconWPA.
- John Shea, 1999.
"What Do Technology Shocks Do?,"
in: NBER Macroeconomics Annual 1998, volume 13, pages 275-322
National Bureau of Economic Research, Inc.
- Charlotta Groth & Soledad Nuñez & Sylaja Srinivasan, 2006. "Productivity growth, adjustment costs and variable factor utilisation: the UK case," Bank of England working papers 295, Bank of England.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Renee Lortie).
If references are entirely missing, you can add them using this form.