Pissarides, Christopher and Vallanti, Giovanna
Productivity growth and employment: theory and panel estimates.
CEP discussion paper; CEPDP0663,
Centre for Economic Performance, London School of Economics and Political Science, London, UK.
Theoretical predictions of the effect of TFP growth on employment are ambiguous, and depend on the extent to which new technology is embodied in new jobs. We estimate a model for employment, wages and investment with an annual panel for the United States, Japan and Europe and find that TFP growth increases employment. For the United States TFP growth explains the trend change in unemployment. We evaluate the model and find that creative destruction plays no part in aggregate unemployment dynamics. The model can explain up to half of the estimated impact of growth on unemployment.
||© 2004 C. A. Pissarides and G. Vallanti
||TFP growth, employment, creative destruction, capitalization effect, unemployment dynamics, embodied technology
|Library of Congress subject classification:
||H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
|Journal of Economic Literature Classification System:
||J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O51 - U.S.; Canada
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe
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