Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/329230 
Year of Publication: 
2024
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 12 [Issue:] 11 [Article No.:] 303 [Year:] 2024 [Pages:] 1-18
Publisher: 
MDPI, Basel
Abstract: 
This paper examines the relationship between a technology shock and employment, considering price, wage rigidities, and heterogeneous agents. To explore this relationship, we utilized a Dynamic Stochastic General Equilibrium (DSGE) model, incorporating households with varying savings rates. For empirical validation, we conducted a Structural Vector Autoregression (SVAR) analysis using data from two economies with distinct savings patterns - the United States and China. This approach allowed us to assess the impact of technology shocks on employment dynamics across different savings environments. Under these conditions, we observe that the effect of technology on aggregate employment is initially positive. Still, it gradually decreases in the mid-term, eventually switching to a negative impact before slowly recovering to equilibrium. The reason for this phenomenon depends on (i) the magnitude of fluctuations in price and wage, precisely, which variable's fluctuations have a greater magnitude, and (ii) which effect, between income effect and substitute effect, is preferred by restricted and unrestricted households. Due to (i), real wages change, and because of (ii), households make different labor supply decisions, leading to fluctuations in employment in response to technology shocks.
Subjects: 
employment
two agents NK model
technology shock
fluctuations
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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