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On the Employment Effect of Technology: Evidence from US Manufacturing for 1958-1996

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  • Yongsung Chang

    ()
    (Federal Reserve Bank of Richmond)

  • Jay H. Hong

    ()
    (Department of Economics, University of Pennsylvania)

Abstract

Recently, Galí and others find that technological progress may be contractionary: a favorable technology shock reduces hours worked in the short run. We ask whether this observation is robust in disaggregate data. According to our VAR analysis of 458 four-digit U.S. manufacturing industries for 1958-1996, some industries do exhibit temporary reduction in hours in response to a permanent increase in TFP. However, there are far more industries in which technological progress significantly increases hours. Using micro data on average price duration, we ask whether the difference across industries is related to the stickiness of industry-output prices. Among 87 manufacturing goods, we do not find such a relation.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 03-004.

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Length: 35 pages
Date of creation: 25 Jan 2003
Date of revision:
Handle: RePEc:pen:papers:03-004

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Keywords: Technology Shocks; Hours Fluctuations; Sticky Prices;

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References

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  1. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 92(367), pages 630-53, September.
  2. Susanto Basu & John Fernald & Miles Kimball, 2004. "Are technology improvements contractionary?," Working Paper Series, Federal Reserve Bank of Chicago WP-04-20, Federal Reserve Bank of Chicago.
  3. Neville Francis & Valerie A. Ramey, 2002. "Is the Technology-Driven Real Business Cycle Hypothesis Dead?," NBER Working Papers 8726, National Bureau of Economic Research, Inc.
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  7. Michael Dotsey, 1999. "Structure from shocks," Working Paper, Federal Reserve Bank of Richmond 99-06, Federal Reserve Bank of Richmond.
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  9. Jordi Gali, 1996. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations," NBER Working Papers 5721, National Bureau of Economic Research, Inc.
  10. Gali, Jordi & Lopez-Salido, J. David & Valles, Javier, 2003. "Technology shocks and monetary policy: assessing the Fed's performance," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(4), pages 723-743, May.
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  18. Mark Bils & Peter J. Klenow, 2004. "Some Evidence on the Importance of Sticky Prices," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(5), pages 947-985, October.
  19. Francis, Neville & Ramey, Valerie A., 2005. "Is the technology-driven real business cycle hypothesis dead? Shocks and aggregate fluctuations revisited," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(8), pages 1379-1399, November.
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  23. Mikael Carlsson, 2003. "Measures of Technology and the Short-run Response to Technology Shocks," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(4), pages 555-579, December.
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Cited by:
  1. Francesco Franco & Thomas Philippon, 2007. "Firms and Aggregate Dynamics," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 587-600, November.
  2. Corsetti, Giancarlo & Dedola, Luca & Leduc, Sylvain, 2006. "Productivity, External Balance and Exchange Rates: Evidence on the Transmission Mechanism among G7 Countries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5853, C.E.P.R. Discussion Papers.
  3. Chahnez Boudaya, 2006. "Stage-specific technology shocks and employment : Could we reconcile with the RBC models ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00115791, HAL.

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