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Technological Progress, Employment and the Lifetime of Capital

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Abstract

We study the impact of technological progress on the level of employment in a vintage capital model where: i) capital and labor are gross complementary; ii) labor supply is endogenous and indivisible; iii) there is full employment, and iv) the rate of labor-saving technological progress is endogenous. We characterize the stationary distributions of vintage capital goods and the corresponding equilibrium values for employment and capital lifetime. It is shown that both variables are non-monotonic functions of technological progress indicators. Technological accelerations are found to increase employment provided innovations are not too radical.

Suggested Citation

  • Raouf Boucekkine & Natali Hritonenko & Yuri Yatsenko, 2015. "Technological Progress, Employment and the Lifetime of Capital," AMSE Working Papers 1550, Aix-Marseille School of Economics, France, revised Dec 2015.
  • Handle: RePEc:aim:wpaimx:1550
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    References listed on IDEAS

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    1. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January.
    2. Raouf Boucekkine & Natali Hritonenko & Yuri Yatsenko, 2013. "Health, Work Intensity, and Technological Innovations," Working Papers halshs-00805199, HAL.
    3. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
    4. Boucekkine, Raouf & Germain, Marc & Licandro, Omar & Magnus, Alphonse, 1998. "Creative Destruction, Investment Volatility, and the Average Age of Capital," Journal of Economic Growth, Springer, vol. 3(4), pages 361-384, December.
    5. Boucekkine, Raouf & Hritonenko, Natali & Yatsenko, Yuri, 2011. "Scarcity, regulation and endogenous technical progress," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 186-199, March.
    6. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    7. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    8. Boucekkine, Raouf & Germain, Marc & Licandro, Omar, 1997. "Replacement Echoes in the Vintage Capital Growth Model," Journal of Economic Theory, Elsevier, vol. 74(2), pages 333-348, June.
    9. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    10. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 1999. "Endogenous vs Exogenously Driven Fluctuations in Vintage Capital Models," Journal of Economic Theory, Elsevier, vol. 88(1), pages 161-187, September.
    11. Feichtinger, Gustav & Hartl, Richard F. & Kort, Peter M. & Veliov, Vladimir M., 2006. "Capital accumulation under technological progress and learning: A vintage capital approach," European Journal of Operational Research, Elsevier, vol. 172(1), pages 293-310, July.
    12. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 805-852.
    13. BOUCEKKINE, Raouf & DE LA CROIX, David & LICANDRO, Omar, 2006. "Vintage capital," CORE Discussion Papers 2006024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Nathalie Greenan & Dominique Guellec, 2000. "Technological Innovation and Employment Reallocation," LABOUR, CEIS, vol. 14(4), pages 547-590, December.
    15. Vivarelli, Marco, 2007. "Innovation and Employment: A Survey," IZA Discussion Papers 2621, Institute of Labor Economics (IZA).
    16. repec:spr:joptap:v:163:y:2014:i:1:d:10.1007_s10957-013-0453-y is not listed on IDEAS
    17. Smolny, Werner, 1998. "Innovations, Prices and Employment: A Theoretical Model and an Empirical Application for West German Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 359-381, September.
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    Keywords

    Vintage capital; Technological progress; Employment; Compensation theory;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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