Technology shocks and sectoral labour market spill-overs

Catalin Dragomirescu-Gaina and Leandro Elia

Economics Letters, 2021, vol. 201, issue C

Abstract: In a multi-sector model estimated on U.S. data, we apply standard long-run restrictions to investigate the labour market consequences of investment-specific and neutral technology shocks. We set up a global VAR model where aggregate technology shocks feed onto sector-specific dynamics and then propagate back through the network structure of the economy. At the aggregate level, our results are consistent with the wealth of existing empirical studies where investment-specific technology shocks trigger favourable employment responses, in contrast to neutral technology shocks. At a disaggregate level, however, we uncover the significant contribution of sectoral spill-overs in response to technology shocks, particularly in driving the adjustment towards long-term equilibrium.

Keywords: Technology shocks; Job creation and destruction; Global VAR (search for similar items in EconPapers)
JEL-codes: E24 J60 O33 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:201:y:2021:i:c:s0165176521000616

DOI: 10.1016/j.econlet.2021.109784

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