Technological progress and (un)employment development

Uwe Blien () and Oliver Ludewig

No 201622, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "One of the key issues in economics is the explanation of unemployment and its variation across different economies. Modern mainstream macroeconomics refers to the effects of financial crises and to institutional structures and their variation across countries. However, unemployment within the European states varies nearly as much as between these countries. In the interior of a country, however, there are only minor differences in institutions. To solve this puzzle, we explain this variation of unemployment building on the regional industry composition and technological progress. It is shown formally that under general and standard preconditions the price elasticity of demand on product markets is decisive: Technological progress leads to an expansion of employment if product demand is elastic. It is accompanied, however, by shrinkage of employment if product demand is inelastic. A transition from the elastic into the inelastic range of the demand function for the most important product(s) can already suffice to plunge a region into crisis. In our empirical analysis we use industry level time series data on output, prices, employment and national income for Germany provided by the Federal Statistical Office. We estimate Marshallian type demand functions using an instrumental variables estimator to derive the price elasticities for different industries and link this information to the regional labour market performance of the respective industries and regions." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Auswirkungen; Beschäftigungseffekte; Beschäftigungsentwicklung; Gütermarkt; Arbeitslosigkeitsentwicklung; ökonomische Theorie; Preisstabilität; Produktivitätsentwicklung; regionaler Vergleich; sektorale Verteilung; Arbeitskräftenachfrage; technischer Fortschritt; Arbeitsmarkttheorie; 1970-2004 (search for similar items in EconPapers)
JEL-codes: J23 Q33 R11 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2016
New Economics Papers: this item is included in nep-geo, nep-ino and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Technological Progress and (Un)employment Development (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:201622

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