Three Essays on Structural Macroeconomics 1206 views

I analyze the effect of an anticipated change to the level of technology (news shocks) on the aggregate labor market. I isolate the news shock associated with technology (capacity utilization adjusted measure of Total Factor Productivity) using a Structural Vector Auto Regression (SVAR) model. I find a significant response along both the intensive and extensive margins of employment. Specifically, I find that vacancies posted and hours worked jump up at the impact of a positive shock and that they stay bounded away from zero at a horizon of 10 years. In contrast, I find that the unemployment rate jumps down at impact and also remains bounded away from zero. Similarly, I find that the labor force participation rate jumps down at impact though the response is insignificant at longer horizons. Anticipation of a 1 percent increase in technology in 1 year causes an immediate jump in vacancies of 1.1 percent, of .058 percent in hours worked, a reduction of 1.45 percent in the unemployment rate and a reduction of .039 percent in the participation rate. Finally, I use the identified technology news time series to study its connection to an important part of the labor market: new business creation. I find that the index of new business is granger-causal for positive news shocks indicating that the standard assumption of exogenous technological advancement in empirical and theoretical macro modeling needs reworking.

PHD (Doctor of Philosophy)

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2013-07-22