Productivity Growth and Employment: Theory and Panel Estimates

Pissarides, Christopher A. and Vallanti, Giovanna (2004) Productivity Growth and Employment: Theory and Panel Estimates. [Discussion Paper]. London School of Economics and Political Science, Centre for Economic Performance. p. 36. CEP Discussion Papers (No. dp0663). (Submitted)

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Theoretical predictions of the effect of TFP growth on employment are ambiguous, anddepend on the extent to which new technology is embodied in new jobs. We estimate amodel 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 StatesTFP growth explains the trend change in unemployment. We evaluate the model and findthat creative destruction plays no part in aggregate unemployment dynamics. The model canexplain up to half of the estimated impact of growth on unemployment.

Item Type: Report / Paper (Discussion Paper)
Research documents and activity classification: Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions: Department of Business and Management
Uncontrolled Keywords: TFP growth; employment; creative destruction; capitalization effect; unemployment dynamics; embodied technology.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Maria Teresa Nisticò
Date Deposited: 21 Dec 2010 09:16
Last Modified: 22 Apr 2015 00:13


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