Technological progress

Abstract

We generalize apparently contradictory results in the literature about the effect of exogenous technological progress on unemployment. We assume that new technology can be adopted either through creative job destruction or through onthe- job implementation at a cost. We show that there is a critical level of implementation cost where the effect of growth on employment switches from positive to negative at higher costs. In extensions of the model we show that gross job reallocation can increase at faster growth with no clear-cut effects on aggregate employment