Journal Article

Technology Shocks and Job Flows

Claudio Michelacci and David Lopez-Salido

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 74, issue 4, pages 1195-1227
Published in print October 2007 | ISSN: 0034-6527
Published online October 2007 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2007.00452.x
Technology Shocks and Job Flows

More Like This

Show all results sharing these subjects:

  • Technological Change; Research and Development
  • Economic Growth and Aggregate Productivity
  • Corporate Governance

GO

Show Summary Details

Preview

We consider a version of the Solow growth model where technological progress can be investment specific or investment neutral. The labour market is subject to search frictions, and the existing productive units may fail to adopt the most recent technological advances. Technological progress can lead to the destruction of technologically obsolete jobs and cause unemployment. We calibrate the model to replicate the high persistence that characterizes the dynamics of firms' neutral technology and the frequency of firms' capital adjustment. We find that neutral technological advances increase job destruction and job reallocation and reduce aggregate employment. Investment-specific technological advances reduce job destruction, have mild effects on job creation, and are expansionary. Hence, neutral technological progress prompts Schumpeterian creative destruction, while investment-specific technological progress operates essentially as in the standard neoclassical growth model. Using structural VAR models, we provide support to the key dynamic implications of the model.

Keywords: G32; O33; O41

Journal Article.  14342 words.  Illustrated.

Subjects: Technological Change; Research and Development ; Economic Growth and Aggregate Productivity ; Corporate Governance

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.