DP4426 Technology Shocks and Job Flows
Author(s): | Jose David Lopez-Salido, Claudio Michelacci |
Publication Date: | June 2004 |
Keyword(s): | creative destruction, search frictions, technological progress |
JEL(s): | E00, J60, O33 |
Programme Areas: | International Macroeconomics, Labour Economics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=4426 |
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.