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ICT as Technical Change in the Matching and Production Functions of a Pissarides-Dixit-Stiglitz model

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  • Ziesemer,Thomas

    (MERIT)

Abstract

In this paper we integrate two workhorse models in economics: The monopolistic competition model of Dixit and Stiglitz and the search unemployment model of Pissarides. Information and communication technology (ICT) is interpreted as i) technical progress in the matching function of the Pissarides labour market search model where it is increasing the probability of filling a vacancy, and ii) as technical change in the production function of the Dixit-Stiglitz goods market model where it is increasing fixed costs and decreasing variable costs. All effects together, modelled as a permanent once-and-for-all ICT shock, increase the vacancy/ unemployment ratio, decrease the long-run equilibrium unemployment rate, and increase wages.

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Bibliographic Info

Paper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number 024.

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Date of creation: 2001
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Handle: RePEc:dgr:umamer:2001024

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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm

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Keywords: economics of technology ;

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  1. Barras, Richard, 1990. "Interactive innovation in financial and business services: The vanguard of the service revolution," Research Policy, Elsevier, vol. 19(3), pages 215-237, June.
  2. Coles, Melvyn G & Smith, Eric, 1994. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," CEPR Discussion Papers 966, C.E.P.R. Discussion Papers.
  3. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  4. Ulrich Kaiser & Winfried Pohlmeier, 2000. "Efficient Bargaining and the Skill-Structure of Wages and Employment," CoFE Discussion Paper 00-24, Center of Finance and Econometrics, University of Konstanz.
  5. David H. Autor, 2001. "Wiring the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 25-40, Winter.
  6. Jackman, R & Layard, Richard & Pissarides, C, 1989. "On Vacancies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 377-94, November.
  7. Jacobebbinghaus, Peter & Zwick, Thomas, 2001. "New technologies and the demand for medium qualified labour in Germany," ZEW Discussion Papers 01-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. John T. Addison & Pedro Portugal, 2002. "Job search methods and outcomes," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 505-533, July.
  9. Callen, Jeffrey L. & Fader, Chris & Krinsky, Itzhak, 2000. "Just-in-time: A cross-sectional plant analysis," International Journal of Production Economics, Elsevier, vol. 63(3), pages 277-301, January.
  10. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
  11. Ulrich Kaiser, 2000. "New Technologies And The Demand For Heterogeneous Labor: Firm-Level Evidence For The German Business-Related Service Sector," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 9(5), pages 465-486.
  12. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  13. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
  14. Patricia M. Anderson & Simon M. Burgess, 2000. "Empirical Matching Functions: Estimation and Interpretation Using State-Level Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 93-102, February.
  15. Hoyt Bleakley & Jeffrey C. Fuhrer, 1997. "Shifts in the Beveridge Curve, job matching, and labor market dynamics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-19.
  16. Bernd Fitzenberger, 1999. "International Trade and the Skill Structure of Wages and Employment in West Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 219(1+2), pages 67-89, July.
  17. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  18. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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