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The ins and outs of unemployment: An analysis conditional on technology shocks

Fabio Canova (), David Lopez-Salido () and Claudio Michelacci ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We analyze how unemployment, job finding and job separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of it volatility; investment-specific shocks expand employment and hours worked and contribute to hours worked volatility. Movements in the job separation rates are responsible for the impact response of unemployment while job finding rates for movements along its adjustment path. The evidence warns against using models with exogenous separation rates and challenges the conventional way of modelling technology shocks in search and sticky price models.

Keywords: Unemployment; technological progress; labor market flows; business cycle models. (search for similar items in EconPapers)
JEL-codes: E00 J60 O33 (search for similar items in EconPapers)
Date: 2009-10, Revised 2012-01
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1213

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