Kiel Working Papers, Kiel Institute for World Economics
No 1505:
Explaining shifts in the unemployment rate with productivity slowdowns and accelerations: a co-breaking approach
Sven Schreiber
Abstract: We investigate the controversial issue whether
unemployment is related to productivity growth in the long run, using U.S.
data in a framework of infrequent mean shifts. Tests find (endogenously
dated) shifts around 1974, 1986, and 1996, system techniques indicate that
the shifts are common features, and the implied long-run link between the
two variables is negative. Therefore the secular decline of unemployment
since the mid 1990s indeed stemmed from higher average productivity growth.
The initial and final regimes are essentially equal, thus supporting
theories that explain the productivity slowdown by a slow adoption process
of IT with associated learning costs
Keywords: productivity slowdown, growth, NAIRU level, common shifts; (follow links to similar papers)
JEL-Codes: E24,; C32,; O40; (follow links to similar papers)
27 pages, March 2009
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