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The Labour Market Effects of Technology Shocks

  • Canova, Fabio
  • Lopez-Salido, Jose David
  • Michelacci, Claudio

We analyze the effects of neutral and investment-specific technology shocks on hours worked and unemployment. We characterize the response of unemployment in terms of job separation and job finding rates. We find that job separation rates mainly account for the impact response of unemployment while job finding rates for movements along its adjustment path. Neutral shocks increase unemployment and explain a substantial portion of unemployment and output volatility; investment-specific shocks expand employment and hours worked and mostly contribute to hours worked volatility. We show that this evidence is consistent with the view that neutral technological progress prompts Schumpeterian creative destruction, while investment specific technological progress has standard neoclassical features.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6365.

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Date of creation: Jun 2007
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Handle: RePEc:cpr:ceprdp:6365
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