Series: Working Papers. 0308.
Author: Claudio Michelacci and David López-Salido.
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Abstract
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 a short run increase in job creation and job destruction and leads to a reduction in aggregate employment. Investmentspecific 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. This provides evidence in favor of models where old jobs can (at least partially) reap the benefits of ongoing technological progress.