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Speed of Technical Progress and Length of the Average Interjob Period

Listed author(s):
  • William J. Baumol

    (The Jerome Levy Economics Institute)

  • Edward N. Wolff

    (The Jerome Levy Economics Institute)

The mean duration of unemployment has approximately doubled in the U.S. between the early 1950s and the mid-1990s, with most of the increase occurring since the early 1970s. We first construct a simple model linking the average duration of unemployment with the speed of technical change. Using aggregate time-series data for the U.S., we find strong evidence that both the rate of TFP growth and investment in office, computing, and accounting equipment (OCA) per employee have a significant positive effect on mean unemployment duration. Moreover, literally all of the two-thirds rise in mean unemployment duration between 1971 and 1994 (two similar points in the business cycle) can be attributed to increases in OCA investment.

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Paper provided by EconWPA in its series Macroeconomics with number 9805022.

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Length: 43 pages
Date of creation: 16 Jun 1998
Handle: RePEc:wpa:wuwpma:9805022
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 43; figures: included
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