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Technological progress

By Dale T Mortensen and Christopher Pissarides


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

Topics: T Technology (General), HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 1995
OAI identifier:
Provided by: LSE Research Online

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  1. (1994). also examined the case of embodied technological progress but concentrated mainly on the analysis of the cyclical properties of job creation and job destruction, a question that we considered in Mortensen and Pissarides
  2. (1994). for an analysis of job creation and job destruction when firms employ many workers.
  3. (1994). Growth and Unemployment', Review of Economic Studies, doi
  4. (1990). The job creation side of the model is similar to that studied in Pissarides
  5. (1994). The model is a generalization of our earlier model, which appeared in Mortensen and Pissarides
  6. Thus our model can also be interpreted as one where firms have different (more precisely, two) implementation costs and co-existence of creative destruction and on-the-job implementation.

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