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TECHNOLOGICAL LEARNING AND LABOR MARKET DYNAMICS

Martin Gervais (), Nir Jaimovich (), Henry Siu () and Yaniv Yedid‐Levi
Authors registered in the RePEc Author Service: Yaniv Yedid-Levi

International Economic Review, 2015, vol. 56, 27-53

Abstract: The search‐and‐matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning‐by‐doing: the notion that it takes workers' time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning, and show that a search‐and‐matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed “news shocks.”

Date: 2015
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http://hdl.handle.net/10.1111/iere.12093

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Working Paper: Technological Learning and Labor Market Dynamics (2013) Downloads
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