Growth and Employment in Europe: Sustainability and Competitiveness, Department of Economics, WU (Wirtschaftsuniversität Wien)
The effect of technology and demand shocks on structural and industrial dynamics: Evidence from Austrian manufacturing.
() and Andreas Reinstaller
Abstract: In this paper we analyse the influence of sector specific
developments in productivity and demand on net entry and employment in 19
industrial sectors of the Austrian economy. Based on the model of
structural dynamics of Pasinetti, we develop an identification scheme that
allows us to extract technology and demand shocks, by means of a structural
vector autoregressive (SVAR) model with long-run restrictions. We study the
patterns of productivity and demand shocks across industries by means of a
principal components analysis and find that sectoral and macro-economic
developments in demand strongly correlate, while this is not the case for
technology shocks. Impulse-response analysis shows that for almost all
sectors productivity growth rates experience an immediate increase to
positive technology shocks while the hours worked decline as conjectured by
Pasinetti. Finally, we use the identified shocks as explanatory variables
in time-series cross-section regressions on net-entry and employment data.
Both types of shocks are able to explain dynamics on the industry level in
terms of employment and sales but not firm dynamics.
Keywords: Industrial dynamics, structural change, technology shocks, demand shocks, entry and exit, employment; (follow links to similar papers)
JEL-Codes: D24,; E13,; L16,; O31; (follow links to similar papers)
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