Premium
TECHNOLOGICAL LEARNING AND LABOR MARKET DYNAMICS
Author(s) -
Gervais Martin,
Jaimovich Nir,
Siu Henry E.,
YedidLevi Yaniv
Publication year - 2015
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12093
Subject(s) - business cycle , matching (statistics) , unemployment , economics , productivity , volatility (finance) , technological change , econometrics , learning by doing , industrial organization , microeconomics , macroeconomics , production (economics) , statistics , mathematics
The search‐and‐matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning‐by‐doing : the notion that it takes workers' time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning, and show that a search‐and‐matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed “news shocks.”