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On the Employment Effect of Technology: Evidence from US Manufacturing for 1958-1996

  • Yongsung Chang

    ()

    (Federal Reserve Bank of Richmond)

  • Jay H. Hong

    ()

    (Department of Economics, University of Pennsylvania)

Recently, Galí and others find that technological progress may be contractionary: a favorable technology shock reduces hours worked in the short run. We ask whether this observation is robust in disaggregate data. According to our VAR analysis of 458 four-digit U.S. manufacturing industries for 1958-1996, some industries do exhibit temporary reduction in hours in response to a permanent increase in TFP. However, there are far more industries in which technological progress significantly increases hours. Using micro data on average price duration, we ask whether the difference across industries is related to the stickiness of industry-output prices. Among 87 manufacturing goods, we do not find such a relation.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/03-004.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 03-004.

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Length: 35 pages
Date of creation: 25 Jan 2003
Date of revision:
Handle: RePEc:pen:papers:03-004
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  17. Mark Bils & Peter J. Klenow, 2002. "Some Evidence on the Importance of Sticky Prices," NBER Working Papers 9069, National Bureau of Economic Research, Inc.
  18. Ramey, Valerie A & Francis, Neville, 2002. "Is The Technology-Driven Real Business Cycle Hypothesis Dead? Shocks and Aggregate Fluctuations Revisted," University of California at San Diego, Economics Working Paper Series qt6x80k3nx, Department of Economics, UC San Diego.
  19. Michael Dotsey, 1999. "Structure from shocks," Working Paper 99-06, Federal Reserve Bank of Richmond.
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