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What are the effects of technology shocks on international labor markets?

Svetlana Rujin ()

No 806, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: How do international labor markets respond to a technology shock and what is the main transmission channel across countries with different labor market institutions? To answer these questions, I identify technology shocks using the approach of Galí (1999) and decompose the responses of total hours worked into movements along the extensive and the intensive margins. Overall, my analysis shows that technology shocks have a negative effect on total hours. This effect is stronger in countries with flexible labor markets, where the adjustment takes place along both margins. In contrast, the responses of total hours are smaller in countries with strict labor market legislation, where labor adjustment takes place along the intensive margin. These differences can be linked to the strictness of institutions that target quantity and price adjustments in the labor market.

Keywords: technology shocks; labor markets; business cycle fluctuations; structural identification (search for similar items in EconPapers)
JEL-codes: O40 O57 E32 C32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-mac
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:806

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