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Technology Shocks and Job Flows

David Lopez-Salido () and Claudio Michelacci ()

No 4426, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We decompose the low-frequency movements in labour productivity into an investment-neutral and investment-specific technology component. We show that neutral technology shocks cause an increase in job creation and job destruction and lead to a reduction in aggregate employment. Investment-specific technology shocks reduce job destruction, have mild effects on job creation and are expansionary. We construct a general equilibrium search model with neutral and investment-specific technological progress. We show that the model can replicate these findings if neutral technological progress is mainly embodied into new jobs, while investment-specific technological progress benefits (almost) equally old and new jobs. Thus neutral technological advances prompt waves of Schumpeterian creative destruction, while the adoption of investment-specific technologies operates mainly as in the standard neoclassical growth model.

Keywords: creative destruction; search frictions; technological progress (search for similar items in EconPapers)
JEL-codes: E00 J60 O33 (search for similar items in EconPapers)
Date: 2004-06
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Journal Article: Technology Shocks and Job Flows (2007) Downloads
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