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Uneven technical process and job destructions

Author

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  • Cohen, Daniel
  • Saint-Paul, Gilles

Abstract

We develop a two-sector model in which technological progress alternatively raises the productivity of one sector after another. We assume that goods are complements for the final consumers. The sector which benefits from technical progress will see a resulting fall in its price . In this model, any uneven technical progress leads to job destruction in the sector which benefits from it, and job creation in the least productive sector. We examine the pattern of wages and unemployment that follow shocks (symmetric or asymmetric) which can occur in the economy. We show that wages will immediately rise and overshoot their long-run target: as time passes they must fall, as will the degree of tightness in the labour market (and sometimes unemployment). An `age of diminished expectations' following any productivity shock is then likely to occur sooner or later.
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Suggested Citation

  • Cohen, Daniel & Saint-Paul, Gilles, 1994. "Uneven technical process and job destructions," CEPREMAP Working Papers (Couverture Orange) 9412, CEPREMAP.
    • Handle: RePEc:cpm:cepmap:9412
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    File URL: http://www.cepremap.fr/depot/couv_orange/co9412.pdf
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    Cited by:

    1. Saint-Paul, Gilles, 2002. "Employment protection, international specialization, and innovation," European Economic Review, Elsevier, vol. 46(2), pages 375-395, February.
    2. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2007. "Technology—Policy Interaction in Frictional Labour-Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(4), pages 1089-1124.
    3. Forslund, Anders & Lindh, Thomas, 2004. "Decentralisation of bargaining and manufacturing employment: Sweden 1970-96," Working Paper Series 2004:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Treier, Volker, 1999. "Unemployment in reforming countries: Causes, fiscal impacts and the success of transformation," BERG Working Paper Series 29, Bamberg University, Bamberg Economic Research Group.
    5. Philippe Askenazy, 1997. "Commerce Nord-Sud, inégalités et croissance endogène," Revue Économique, Programme National Persée, vol. 48(5), pages 1219-1240.
    6. Violante, Giovanni & Hornstein, Andreas, 2005. "The Replacement Problem in Frictional Economies: An 'Equivalence Result'," CEPR Discussion Papers 5026, C.E.P.R. Discussion Papers.
    7. Gersbach, Hans & Schniewind, Achim, 2002. "Uneven Technical Progress and Unemployment," IZA Discussion Papers 478, Institute of Labor Economics (IZA).
    8. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2005. "The Replacement Problem In Frictional Economies: A Near-Equivalence Result," Journal of the European Economic Association, MIT Press, vol. 3(5), pages 1007-1057, September.
    9. Claudio Michelacci & David Lopez-Salido, 2004. "Technology Shocks and Job Flows," Working Papers wp2004_0405, CEMFI.
    10. Ramser, Hans Jürgen, 1995. "Arbeitslosigkeit und Wirtschaftswachstum," Discussion Papers, Series I 278, University of Konstanz, Department of Economics.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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