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Technological Learning and Labor Market Dynamics

  • Martin Gervais
  • Nir Jaimovich
  • Henry E. Siu
  • Yaniv Yedid-Levi

The search-and-matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning-by-doing: the notion that it takes workers time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning and show that a search-and-matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed "news shocks."

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19767.

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Date of creation: Dec 2013
Publication status: published as Martin Gervais & Nir Jaimovich & Henry E. Siu & Yaniv Yedid‐Levi, 2015. "Technological Learning And Labor Market Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 27-53, 02.
Handle: RePEc:nbr:nberwo:19767
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