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Productivity growth and employment: theory and panel estimates

Pissarides, Christopher and Vallanti, Giovanna (2004) Productivity growth and employment: theory and panel estimates. CEP discussion paper; CEPDP0663, 0663. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 0663


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.

Item Type: Monograph (Discussion Paper)
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Additional Information: © 2004 C. A. Pissarides and G. Vallanti
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Series: Working Papers > CEP Discussion Papers
Date Deposited: 27 Apr 2007
Last Modified: 14 Nov 2012 10:19

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