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The dynamics of hours worked and technology

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  • Cantore, Cristiano
  • Ferroni, Filippo
  • León-Ledesma, Miguel A.

Abstract

The response of hours worked to technology shocks in the postwar US economy has increased over time. We offer a structural interpretation of this important time-varying macroeconomic moment. The time varying patterns captured by a structural VAR are consistent with those obtained from a parsimonious RBC model with a less than unitary elasticity of substitution between capital and labour (σ). The observed changes in the response of hours are attributable to increases in the magnitude of the degree of capital-labour substitution. Finally, we conjecture that the observed time-variation in σ is related to changes in the skill composition of the work force and biases in technological change.

Suggested Citation

  • Cantore, Cristiano & Ferroni, Filippo & León-Ledesma, Miguel A., 2017. "The dynamics of hours worked and technology," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 67-82.
  • Handle: RePEc:eee:dyncon:v:82:y:2017:i:c:p:67-82
    DOI: 10.1016/j.jedc.2017.05.009
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    Cited by:

    1. Tommaso Ferraresi & Andrea Roventini & Willi Semmler, 2016. "Macroeconomic regimes, technological shocks and employment dynamics," Documents de Travail de l'OFCE 2016-19, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Cristiano Cantore & Paul Levine & Giovanni Melina, 2014. "A Fiscal Stimulus and Jobless Recovery," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 669-701, July.
    3. Cantore, Cristiano & Levine, Paul & Pearlman, Joseph & Yang, Bo, 2015. "CES technology and business cycle fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 61(C), pages 133-151.
    4. Kiguchi, Takehiro & Mountford, Andrew, 2013. "The macroeconomics of immigration," MPRA Paper 45517, University Library of Munich, Germany.
    5. Di Pace, Federico & Villa, Stefania, 2016. "Factor complementarity and labour market dynamics," European Economic Review, Elsevier, vol. 82(C), pages 70-112.
    6. Marta Aloi & Huw Dixon & Anthony Savagar, 2018. "Labour responses, regulation and business churn in a small open economy," Discussion Papers 2018/06, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    7. John G. Fernald & J. Christina Wang, 2016. "Why Has the Cyclicality of Productivity Changed? What Does It Mean?," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 465-496, October.

    More about this item

    Keywords

    Real business cycles models; Constant elasticity of substitution production function; Hours worked; Technology shocks;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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