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Investment-specific technical progress, capital obsolescence and job creation

Fernando del Rio ()

Labour Economics, 2010, vol. 17, issue 1, 248-257

Abstract: This paper shows that faster disembodied technological progress - if it is investment-specific - might reduce job creation because the obsolescence cost of capital increases, which reduces the net return of a job. This effect could be called the obsolescence effect. It is also shown that the increase in the rate of decline of the U.S. relative price of investment - which can be used as a proxy for the rate of investment-specific technical progress - may have increased the obsolescence costs of capital, which might account for the observed fall in U.S. vacancy-unemployment ratios and job finding rates after the mid-seventies.

Keywords: Unemployment; Job; creation; Matching; Investment-specific; technical; progress; Obsolescence (search for similar items in EconPapers)
Date: 2010
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