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Technology Adoption, Turbulence and the Dynamics of Unemployment


  • Georg Duernecker


The divergence of unemployment rates between the U.S. and Europe coincided with a substantial acceleration in capital-embodied technical change in the late 70’s. Furthermore, evidence suggests that European economies have been lagging behind the U.S. in the adoption and usage of new technologies. This paper argues that the pace of technology adoption plays a fundamental role for how an economy’s labor market reacts to an acceleration in capital-embodied growth. The framework proposed offers an appealing and novel explanation for the divergence of unemployment rates across economies that are hit by the very same shock (i.e. the acceleration in embodied technical change) but differ in their technology adoption behavior. Moreover, we challenge the conventional wisdom that high European unemployment is the result of institutional rigidities by claiming that institutions are not the principal cause per se but they rather amplify certain forces that promote the emergence of high unemployment.

Suggested Citation

  • Georg Duernecker, 2008. "Technology Adoption, Turbulence and the Dynamics of Unemployment," Economics Working Papers ECO2008/10, European University Institute.
  • Handle: RePEc:eui:euiwps:eco2008/10

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    References listed on IDEAS

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    Cited by:

    1. Roger, Perman & Jean-Philippe, Boussemart & Walter, Briec & Christophe, Tavéra, 2013. "How do technical change and technological distance influence the size of the Okun’s Law coefficient?," SIRE Discussion Papers 2013-60, Scottish Institute for Research in Economics (SIRE).
    2. Julien Albertini & Jean Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2016. "Aggregate Employment, Job Polarization and Inequalities: A Transatlantic Perspective," SFB 649 Discussion Papers SFB649DP2016-014, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

    More about this item


    Unemployment; Labor Market Search and Matching; Turbulence; Skill Loss; Technology Adoption; Training;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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