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Information and Communication Technology as Technical Change in Matching and Production

Listed author(s):
  • Thomas Ziesemer

    ()

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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File URL: http://hdl.handle.net/10.1007/s00712-002-0583-4
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Article provided by Springer in its journal Journal of Economics.

Volume (Year): 79 (2003)
Issue (Month): 3 (07)
Pages: 263-287

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Handle: RePEc:kap:jeczfn:v:79:y:2003:i:3:p:263-287
DOI: 10.1007/s00712-002-0583-4
Contact details of provider: Web page: http://www.springer.com

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