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Technology shocks, employment and labour market frictions

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  • Mandelman, Federico S

    (Federal Reserve Bank of Atlanta)

  • Zanetti, Francesco

    (Bank of England)

Abstract

Recent empirical evidence suggests that a positive technology shock leads to a decline in labour inputs. However, the standard real business model fails to account for this empirical regularity. Can the presence of labour market frictions address this problem, without otherwise altering the functioning of the model? We develop and estimate a real business cycle model using Bayesian techniques that allows, but does not require, labour market frictions to generate a negative response of employment to a technology shock. The results of the estimation support the hypothesis that labour market frictions are the factor responsible for the negative response of employment.

Suggested Citation

  • Mandelman, Federico S & Zanetti, Francesco, 2010. "Technology shocks, employment and labour market frictions," Bank of England working papers 390, Bank of England.
    • Handle: RePEc:boe:boeewp:0390
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    Cited by:

    1. Gill Hammond, 2012. "State of the art of inflation targeting," Handbooks, Centre for Central Banking Studies, Bank of England, edition 4, number 29, April.
    2. Auray, Stéphane & de Blas, Beatriz, 2013. "Investment, matching and persistence in a modified cash-in-advance economy," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 591-610.
    3. Bonev, Pavlin, 2013. "Government Intervention in Postsecondary Education in Bulgaria," MPRA Paper 52669, University Library of Munich, Germany.
    4. Rebei, Nooman, 2014. "What (really) accounts for the fall in hours after a technology shock?," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 330-352.
    5. Zanetti Francesco, 2012. "The Laffer Curve in a Frictional Labor Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-23, September.
    6. Chopra, ParveshK., 2022. "A Systems Model to Measure Labour Market Dynamics," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(4), pages 465-518.

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    More about this item

    Keywords

    Technology shocks; employment; labour market frictions;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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