Sector-biased technology shocks; Factor-augmenting efficiency; Open economy; Labor reallocation; CES production function; Labor income share
Résumé :
[en] Our VAR evidence for OECD countries reveals that the non-traded sector alone drives the increase in hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock generates a reallocation of labor toward the non-traded sector which contributes to 35% of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open economy model with flexible prices can reproduce the labor market effects we document empirically once we allow for imperfect mobility of labor, a demand for home-produced traded goods which is elastic enough w.r.t. the terms of trade, and factor-biased technological change. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we estimate increases once we let factor-biased technological change vary between sectors and countries.
Disciplines :
Méthodes quantitatives en économie & gestion
Auteur, co-auteur :
BERTINELLI, Luisito ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Cardi, Olivier
Restout, Romain
Co-auteurs externes :
yes
Langue du document :
Anglais
Titre :
Labor Market Effects Of Technology Shocks Biased Toward The Traded Sector
Acemoglu, Daron, Labor- and capital-augmenting technical change. J. Europ. Econ. Assoc. 1:1 (2003), 1–37.
Acemoglu, Daron, Guerrieri, Veronica, Capital deepening and nonbalanced economic growth. J. Pol. Econ. 106:3 (2008), 467–498.
Alvarez-Cuadrado, Francisco, Van Long, Ngo, Poschke, Markus, Capital-labor substitution. Struc. Change Labor Income Share J. Econ. Dyn. Contr. 87 (2018), 206–231.
Antràs, Pol, Is the U.S. aggregate production function cobb-douglas?. New estimates of the elasticity of substitution, the B.E. J. Macroecon. 4:1 (2004), 1–36.
Arellano, C., Yan, B., Gabriel, M., Default risk, sectoral reallocation, and persistent recessions. J. Int. Econ. 112:C (2018), 182–199.
Backus, David K., Kehoe, Patrick J., Kydland, Finn E., Dynamics of the trade balance and the terms of trade: the j-curve?. Am. Econ. Rev. 84:1 (1994), 84–103.
Bajzik, J., Havranek, T., Irsova, Z., Schwarz, J., Estimating the armington elasticity: the importance of study design and publication bias. J. Int. Econ., 127(C), 2020.
Basu, Susanto, Kimball, Miles S., Fernald, John G., Are technology improvements contractionary?. Am. Econ. Rev. 96:5 (2006), 1418–1448.
Bems, Rudolfs, Aggregate investment expenditures on tradable and nontradable goods. Rev. Econ. Dyn. 4 (2008), 852–883.
Benati, Luca, The “great moderation” in the United Kingdom. J. Money Credit Bank. 40:1 (2008), 121–147.
Benigno, Gianluca, Fornaro, Luca, The financial resource curse. Scandinavian J. Econ. 116:1 (2014), 58–86.
Best, Michael Carlos, James, S. Cloyne, Ilzetzki, E., Kleven, H.J., Estimating the elasticity of intertemporal substitution using mortgage notches. Rev. Econ. Stud. 87:2 (2020), 656–690.
Cantore, Cristiano, Ferroni, Filippo, León-Ledesma, Miguel, The dynamics of hours worked and technology. J. Econ. Dyn. Control 82 (2017), 67–82.
Carroll, Christopher D., Overland, Jody, Weil, David N., Saving and growth with habit formation. Am. Econ. Rev. 90:3 (2000), 341–355.
Caselli, Francesco, Technology Differences over Time and Space. 2016, Princeton University Press, Princeton and Oxford.
Caselli, Francesco, Coleman, John Wilbur II, The World technology frontier. Am. Econ. Rev. 96:3 (2006), 499–522.
Chang, Yongsung, Hong, Jay H., Do technological improvements in the manufacturing sector raise or lower employment?. Am. Econ. Rev. 96:1 (2006), 352–368.
Chari, Varadarajan V., Kehoe, Patrick J., McGrattan, Ellen R., Are structural vars with long-run restrictions useful in developing business cycle theory?. J. Monetary Econ. 55:8 (2008), 1337–1352.
Chaudourne, Jeremy, Féve, Patrick, Alain, Guay, Understanding the effect of technology shocks in svars with long-run restrictions. J. Econ. Dyn. Control 41:C (2014), 154–172.
Chen, Kaiji, Wemy, Edouard, Investment-specific technological changes: the source of long-run TFP fluctuations. Europ. Econ. Rev. 80:C (2015), 230–252.
Chirinko, Robert S., Mallick, Debdulal, The substitution elasticity, factor shares, and the low-frequency panel model. Am. Econ. J.: Macroecon. 9:4 (2017), 225–253.
Christiano, Lawrence J., Eichenbaum, Martin, Vigfusson, Robert, Assessing structural VARs. NBER chapters. NBER Macroeconomics Annual 2006, Volume 21, 1-106, National Bureau of Economic Research, Inc, 2006.
Collard, Fabrice, Dellas, Harris, Technology shocks and employment. Econ. J. 117:523 (2007), 1436–1459.
Crossley, Thomas F., Low, Hamish W., Is the elasticity of intertemporal substitution constant?. J. Europ. Econ. Assoc. 9:1 (2011), 87–105.
Cundy, Lance D., Essays on the Elasticity of Intertemporal Substitution. PhD thesis. 2018.
De Gregorio, Jose, Giovannini, Alberto, Wolf, Holger C., International evidence on tradables and nontradables inflation. Europ. Econ. Rev. 38 (1994), 1225–1244.
Duarte, Margarida, Restuccia, Diego, The role of the structural transformation in aggregate productivity. Quart. J. Econ. 125:1 (2010), 129–173.
Duarte, Margarida, Restuccia, Diego, Relative prices and sectoral productivity. J. Europ. Econ. Assoc. 18:3 (2020), 1400–1443.
Dupaigne, Martial, Féve, Patrick, Technology shocks around the world. Rev. Econ. Dyn. 12:4 (2009), 592–607.
Eberly, Janice Sergio Rebelo, Vincent, Nicolas, Investment and value: a neoclassical benchmark. NBER Working Papers 13866, 2008.
Erceg, Christopher J., Guerrieri, Luca, Gust, Christopher, Can long-run restrictions identify technology shocks. J. Europ. Econ. Assoc. 3:6 (2005), 1237–1278.
Faust, Jon, Leeper, Eric M., When do long-run identifying restrictions give reliable results?. J. Bus. Econ. Stat. 15:3 (1997), 345–353.
Fernández de Córdoba, Gonzalo, Kehoe, Timothy J., Capital flows and real exchange rate fluctuations following spain's entry into the european community. J. Int. Econ. 51:1 (2000), 49–78.
Foerster, Andrew T., Sarte, Pierre-Daniel G., Watson, Mark W., Sectoral versus aggregate shocks: a structural analysis of industrial production. J. Pol. Econ. 119 (2011), 1–38.
Fornaro, Luca, International debt deleveraging. J. Europ. Econ. Assoc. 16:5 (2018), 1394–1432.
Francis, Neville, Ramey, Valerie A., Is the technology-driven real business cycle hypothesis dead?. Shocks and aggregate fluctuations revisited. J. Monetary Econ. 52:8 (2005), 1379–1399.
Francis, Neville, Owyang, Michael T., Roush, Jennifer E., DiCecio, Riccardo, A flexible finite-horizon alternative to long-run restrictions with an application to technology shocks. Rev. Econ. Stat. 96:4 (2014), 638–664.
Galí, Jordi, Technology. Employment and the business cycle: do technology shocks explain aggregate fluctuations?. Am. Econ. Rev. 89:1 (1999), 249–271.
Galí, Jordi, Gambetti, Luca, On the sources of great moderation. Am. Econ. J.: Macroecon. 1:1 (2009), 26–57.
Garìn, Julio, Pries, Michael, Sims, Eric, The relative importance of aggregate and sectoral shocks and the changing nature of economic fluctuations. Am. Econ. J.: Macroecon. 10:1 (2018), 119–148.
Garofalo, Gasper A., Yamarik, Steven, Regional convergence: evidence from a new state-by-state capital stock series. Rev. Econ. Stat. 84:2 (2002), 316–323.
Gollin, D., Getting income shares right. J. Pol. Econ. 110 (2002), 458–474.
González Cabanillas, Laura, Ruscher, Eric, The great moderation in the euro area: what role have macroeconomic policies played?. European Economy Discussion Papers no. 331, 2016.
Gourinchas, Pierre-Olivier, Parker, Jonathan A., Consumption over the life cycle. Econometrica 70:1 (2002), 47–89.
Greenwood, Jeremy, Hercowitz, Zvi, Huffman, Gregory W., Investment, capacity utilization, and the real business cycle. Am. Econ. Rev. 78 (1988), 402–417.
Gruber, J., A tax-based estimate of the elasticity of intertemporal substitution. Quart. J. Finance, 3(1), 2013.
Hlatshwayo, Sandile, Spence, Michael, Demand and defective growth patterns: the role of the tradable and non-tradable sectors in an open economy. Am. Econ. Rev. 104:5 (2014), 272–277.
Holly, Sean, Petrella, Ovan, Factor demand linkages, technology shocks, and the business cycle. Rev. Econ. Stat. 94:4 (2012), 948–963.
Horvath, Michael, Sectoral shocks and aggregate fluctuations. J. Monetary Econ. 45 (2000), 69–106.
Inklaar, Robert W., Diewert, Erwin, Measuring industry productivity and cross-country convergence. J. Econmet. 191:2 (2016), 426–433.
Imbs, Jean, Technology, growth and the business cycle. J. Monetary Econ. 44:1 (1999), 65–80.
Jensen, Bradford J., Kletzer, Lori G., Offshoring white-collar work. Collins, Susan M., Brainard, Lael, (eds.) Brookings Trade Forum 2005, Offshoring White-Collar Work, 2006, Washington, DC, Brookings Institution, 75–134.
Kehoe, Timothy J., Ruhl, Kim J., Sudden stops, sectoral reallocations, and the real exchange rate. J. Dev. Econ. 89:2 (2009), 235–249.
Kehoe, Timothy, Ruhl, Kim J., Steinberg, Joseph B., Global imbalances and structural change in the United States. J. Pol. Econ. 126:2 (2018), 761–796.
Klump, R., McAdam, P., Willman, A., Factor substitution and factor-augmenting technical progress in the United States: a normalized supply-side system approach. Rev. Econ. Stat. 89:1 (2007), 183–192.
Lee, D., Wolpin, Kenneth I., Intersectoral labor mobility and the growth of the service sector. Econometrica 74 (2006), 1–46.
Long, John B. Jr., Plosser, Charles I., Real business cycles. J. Pol. Econ. 91 (1983), 39–69.
Ngai, Rachel L., Pissarides, Christopher A., Structural change in a multisector model of growth. Am. Econ. Rev. 97:1 (2007), 429–443.
Oberfield, E., Raval, D., Micro data and macro technology. NBER Working Papers 20452, 2014.
Peterman, W.B., Reconciling micro and macro estimates of the frisch labor supply elasticity. Econ. Inq. 54:1 (2016), 100–120.
Rodrik, D., Unconditional convergence in manufacturing. Quart. J. Econ. 128:1 (2013), 165–204.
Shimer, R., Convergence in macroeconomics: the labor wedge. Am. Econ. J.: Macroecon. 1:1 (2009), 280–297.
Stockman, C.A., Tesar, Linda L., Tastes and technology in a two-country model of the business cycle: explaining international comovements. Am. Econ. Rev. 85:1 (1995), 168–185.
Turnosvsky, Stephen J., International Macroeconomic Dynamics. 1997, MIT press, Cambridge, Massachusetts.
