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Labor Market Effects of Technology Shocks biased toward the Traded Sector

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Labor Market Effects of Technology Shocks biased toward the Traded Sector. / Bertinelli, Luisito; Cardi, Olivier; Restout, Romain.
In: Journal of International Economics, Vol. 138, 103645, 30.09.2022.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Harvard

Bertinelli, L, Cardi, O & Restout, R 2022, 'Labor Market Effects of Technology Shocks biased toward the Traded Sector', Journal of International Economics, vol. 138, 103645. https://doi.org/10.1016/j.jinteco.2022.103645

APA

Bertinelli, L., Cardi, O., & Restout, R. (2022). Labor Market Effects of Technology Shocks biased toward the Traded Sector. Journal of International Economics, 138, Article 103645. https://doi.org/10.1016/j.jinteco.2022.103645

Vancouver

Bertinelli L, Cardi O, Restout R. Labor Market Effects of Technology Shocks biased toward the Traded Sector. Journal of International Economics. 2022 Sept 30;138:103645. Epub 2022 Jul 4. doi: 10.1016/j.jinteco.2022.103645

Author

Bertinelli, Luisito ; Cardi, Olivier ; Restout, Romain. / Labor Market Effects of Technology Shocks biased toward the Traded Sector. In: Journal of International Economics. 2022 ; Vol. 138.

Bibtex

@article{52ed1b7469604efb9b3bf20c13f86c4e,
title = "Labor Market Effects of Technology Shocks biased toward the Traded Sector",
abstract = "Our VAR evidence for OECD countries reveals that the non-traded sector alone drives the increase in hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock generates a reallocation of labor toward the non-traded sector which contributes to 35% of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open economy model with flexible prices can reproduce the labor market effects we document empirically once we allow for imperfect mobility of labor, a demand for home-produced traded goods which is elastic enough w.r.t. the terms of trade, and factor-biased technological change. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we estimate increases once we let factor-biased technological change vary between sectors and countries.",
keywords = "Sector-biased technology shocks, Factor-augmenting efficiency, Open economy, Labor reallocation, CES production function, Labor income share",
author = "Luisito Bertinelli and Olivier Cardi and Romain Restout",
year = "2022",
month = sep,
day = "30",
doi = "10.1016/j.jinteco.2022.103645",
language = "English",
volume = "138",
journal = "Journal of International Economics",
issn = "0022-1996",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Labor Market Effects of Technology Shocks biased toward the Traded Sector

AU - Bertinelli, Luisito

AU - Cardi, Olivier

AU - Restout, Romain

PY - 2022/9/30

Y1 - 2022/9/30

N2 - Our VAR evidence for OECD countries reveals that the non-traded sector alone drives the increase in hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock generates a reallocation of labor toward the non-traded sector which contributes to 35% of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open economy model with flexible prices can reproduce the labor market effects we document empirically once we allow for imperfect mobility of labor, a demand for home-produced traded goods which is elastic enough w.r.t. the terms of trade, and factor-biased technological change. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we estimate increases once we let factor-biased technological change vary between sectors and countries.

AB - Our VAR evidence for OECD countries reveals that the non-traded sector alone drives the increase in hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock generates a reallocation of labor toward the non-traded sector which contributes to 35% of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open economy model with flexible prices can reproduce the labor market effects we document empirically once we allow for imperfect mobility of labor, a demand for home-produced traded goods which is elastic enough w.r.t. the terms of trade, and factor-biased technological change. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we estimate increases once we let factor-biased technological change vary between sectors and countries.

KW - Sector-biased technology shocks

KW - Factor-augmenting efficiency

KW - Open economy

KW - Labor reallocation

KW - CES production function

KW - Labor income share

U2 - 10.1016/j.jinteco.2022.103645

DO - 10.1016/j.jinteco.2022.103645

M3 - Journal article

VL - 138

JO - Journal of International Economics

JF - Journal of International Economics

SN - 0022-1996

M1 - 103645

ER -