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Title: The Impact of TFP Growth on Steady-State Unemployment

Author(s): Christopher Pissarides and Giovanna Vallanti

Publication Date: April 2005

Keyword(s): capitalization effect, creative destruction, embodied technology, TFP growth and unemployment

Programme Area(s): International Macroeconomics

Abstract: Theoretical predictions of the impact of TFP growth on unemployment are ambiguous, and depend on the extent to which new technology is embodied in new jobs. We evaluate a model with embodied and disembodied technology, capitalization, and creative destruction effects by estimating the impact of TFP growth on unemployment in a panel of industrial countries. We find a large negative impact which implies that embodied technology and creative destruction play no role in the steady-state dynamics of unemployment. Capitalization effects explain some of the estimated impact but a part remains unexplained.

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Bibliographic Reference

Pissarides, C and Vallanti, G. 2005. 'The Impact of TFP Growth on Steady-State Unemployment'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5002