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Do Technology Shocks Lower Hours Worked? Evidence from the Japan Industrial Productivity Database

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  • KWON Hyeog Ug
  • Jun-Hyung KO

Abstract

We examine the response of productivity and hours worked to technology and non-technology shocks using the Japan Industrial Productivity (JIP) Database. We find that, at the aggregate level, (1) hours worked increase in response to positive technology shocks both in the manufacturing and the nonmanufacturing sectors, which is consistent with the conventional real-business-cycle model; and (2) productivity decreases in response to positive non-technology shocks. At the two- and three-digit industry levels, we find that the correlation between productivity and hours worked in response to technology shocks still tends to be positive in the manufacturing sector while negative in the nonmanufacturing sector. Further, decomposing non-technology shocks into permanent changes in the relative size of industries and industry-specific shocks shows that the negative productivity response to non-technology shocks originates from industry-specific factors.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13018.

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Length: 30 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:eti:dpaper:13018

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  1. Luca Gambetti & Jordi Gal�, 2009. "On the Sources of the Great Moderation," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 26-57, January.
  2. Galí, Jordi, 1996. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," CEPR Discussion Papers 1499, C.E.P.R. Discussion Papers.
  3. 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.
  4. Francesco Franco & Thomas Philippon, 2007. "Firms and Aggregate Dynamics," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 587-600, November.
  5. Marchetti, Domenico J. & Nucci, Francesco, 2006. "Pricing Behaviour and the Response of Hours to Productivity Shocks," CEPR Discussion Papers 5504, C.E.P.R. Discussion Papers.
  6. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-77, December.
  7. Uhlig, Harald, 2005. "What are the effects of monetary policy on output? Results from an agnostic identification procedure," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 381-419, March.
  8. Alan G. Ahearne & Naoki Shinada, 2005. "Zombie Firms and Economic Stagnation in Japan," Hi-Stat Discussion Paper Series d05-95, Institute of Economic Research, Hitotsubashi University.
  9. Valerie A. Ramey & Neville Francis, 2007. "Measures of Per Capita Hours and their Implications for the Technology-Hours Debate," 2007 Meeting Papers 314, Society for Economic Dynamics.
  10. Carlsson, Mikael & Smedsaas, Jon, 2006. "Technology Shocks and the Labor-Input Response: Evidence from Firm-Level Data," Working Paper Series 198, Sveriges Riksbank (Central Bank of Sweden).
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