Abstract
Whether technological progress raises or lowers employment in the short run has been the subject of much debate in the recent years. We show that cross-industry differences in inventory holding costs, demand elasticities, and price rigidities potentially all affect employment decisions in the face of productivity shocks. In particular, the employment response to a permanent productivity shock is more likely to be positive the less costly it is to hold inventories, the more elastic industry demand is, and the more flexible prices are. Using data on 458 4-digit U.S. manufacturing industries over the period 1958-1996, we find statistically significant effects of variations in inventory holdings and demand elasticities on short-run employment responses, but less conclusive evidence pertaining to the effects of measured price stickiness.
| Original language | English |
|---|---|
| Pages (from-to) | 328-343 |
| Number of pages | 16 |
| Journal | Journal of Monetary Economics |
| Volume | 56 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2009 Apr 1 |
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All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics
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On the employment effects of productivity shocks : The role of inventories, demand elasticity, and sticky prices. / Chang, Yongsung; Hornstein, Andreas; Sarte, Pierre Daniel.
In: Journal of Monetary Economics, Vol. 56, No. 3, 01.04.2009, p. 328-343.Research output: Contribution to journal › Article
TY - JOUR
T1 - On the employment effects of productivity shocks
T2 - The role of inventories, demand elasticity, and sticky prices
AU - Chang, Yongsung
AU - Hornstein, Andreas
AU - Sarte, Pierre Daniel
PY - 2009/4/1
Y1 - 2009/4/1
N2 - Whether technological progress raises or lowers employment in the short run has been the subject of much debate in the recent years. We show that cross-industry differences in inventory holding costs, demand elasticities, and price rigidities potentially all affect employment decisions in the face of productivity shocks. In particular, the employment response to a permanent productivity shock is more likely to be positive the less costly it is to hold inventories, the more elastic industry demand is, and the more flexible prices are. Using data on 458 4-digit U.S. manufacturing industries over the period 1958-1996, we find statistically significant effects of variations in inventory holdings and demand elasticities on short-run employment responses, but less conclusive evidence pertaining to the effects of measured price stickiness.
AB - Whether technological progress raises or lowers employment in the short run has been the subject of much debate in the recent years. We show that cross-industry differences in inventory holding costs, demand elasticities, and price rigidities potentially all affect employment decisions in the face of productivity shocks. In particular, the employment response to a permanent productivity shock is more likely to be positive the less costly it is to hold inventories, the more elastic industry demand is, and the more flexible prices are. Using data on 458 4-digit U.S. manufacturing industries over the period 1958-1996, we find statistically significant effects of variations in inventory holdings and demand elasticities on short-run employment responses, but less conclusive evidence pertaining to the effects of measured price stickiness.
UR - http://www.scopus.com/inward/record.url?scp=67349214931&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=67349214931&partnerID=8YFLogxK
U2 - 10.1016/j.jmoneco.2009.02.004
DO - 10.1016/j.jmoneco.2009.02.004
M3 - Article
AN - SCOPUS:67349214931
VL - 56
SP - 328
EP - 343
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
SN - 0304-3932
IS - 3
ER -