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The effects of technological innovations on employment : a new explanation

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This paper investigates principally the effects of a technological innovation on hours worked in a sticky price model. Our challenge is to reproduce the short-run decline in employment supported by a large range of recent works, inspired by Gali (1999), regardless of any monetary policy consideration. The model simulations concern the post war U.S. economy under two different monetary policies : an exogenous rule targeting money supply and a simple Taylor rule. The most interesting result is that the introduction of an input-output production structure counterbalances the full-accommodation of a technological innovation when monetary policy is governed by a Taylor rule, by (i) providing the model with more price rigidities ; (ii) inducing a substitution effect between intermediate goods and labor input for plausible values of intermediate inputs share.

Suggested Citation

  • Chahnez Boudaya, 2005. "The effects of technological innovations on employment : a new explanation," Cahiers de la Maison des Sciences Economiques v05013, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:v05013
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    Cited by:

    1. Chahnez Boudaya, 2006. "Stage-specific technology shocks and employment : Could we reconcile with the RBC models ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00115791, HAL.

    More about this item

    Keywords

    Technology shocks; sticky prices; labor; intermediate inputs; Taylor rule; exogenous monetary policy.;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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