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Investment-specific technical progress, capital obsolescence and job creation

  • del Rio, Fernando

This paper shows that faster disembodied technological progress - if it is investment-specific - might reduce job creation because the obsolescence cost of capital increases, which reduces the net return of a job. This effect could be called the obsolescence effect. It is also shown that the increase in the rate of decline of the U.S. relative price of investment - which can be used as a proxy for the rate of investment-specific technical progress - may have increased the obsolescence costs of capital, which might account for the observed fall in U.S. vacancy-unemployment ratios and job finding rates after the mid-seventies.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 1 (January)
Pages: 248-257

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Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:248-257
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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