American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Do Technological Improvements in the Manufacturing Sector Raise or Lower Employment?
American Economic Review
vol. 96,
no. 1, March 2006
(pp. 352–368)
Abstract
We find that technology's effect on employment varies greatly across manufacturing industries. Some industries exhibit a temporary reduction in employment in response to a permanent increase in TFP, whereas many more industries exhibit an employment increase in response to a permanent TFP shock. This raises serious questions about existing work that finds a labor productivity shock has a strong negative effect on employment. There are tantalizing and interesting differences between TFP and labor productivity. We argue that TFP is a more natural measure of technology because labor productivity reflects shifts in the input mix as well as in technology.Citation
Chang, Yongsung, and Jay H. Hong. 2006. "Do Technological Improvements in the Manufacturing Sector Raise or Lower Employment?" American Economic Review, 96 (1): 352–368. DOI: 10.1257/000282806776157687Additional Materials
JEL Classification
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- L60 Industry Studies: Manufacturing: General
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence