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Technology Shocks And Job Flows

  • Claudio Michelacci


  • David Lopez-Salido


    (CEMFI, Centro de Estudios Monetarios y Financieros)

We decompose the low-frequency movements in labour productivity into an investment-neutral and investment-specific technology component. We show that neutral technology shocks cause an increase in job creation and job destruction and lead to a reduction in aggregate employment. Investment-specific technology shocks reduce job destruction, have mild effects on job creation and are expansionary. We construct a general equilibrium search model with neutral and investment-specific technological progress. We show that the model can replicate these findings if neutral technological progress is mainly embodied into new jobs, while investment-specific technological progress benefits (almost) equally old and new jobs. Thus neutral technological advances prompt waves of Schumpeterian creative destruction, while the adoption of investment-specific technologies operates mainly as in the standard neoclassical growth model.

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Paper provided by CEMFI in its series Working Papers with number wp2004_05.

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Date of creation: Mar 2004
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Handle: RePEc:cmf:wpaper:wp2004_05
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