SMU SOE Seminar (Nov 28, 2018): The Technological Origins of the Decline in Labor Market Dynamism

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ABSTRACT In the last decades, there has been a marked decline in the job flows to and from unemployment and between employments. We ask whether and how technological change can account for his secular decline in labor market dynamism. We propose a theory that focuses on two determinants of technology broadly defined: 1. the complementarity between worker skill and firm productivity; and 2. the volatility in productivity shocks. We derive job flows in a sorting model with search frictions and endogenous search effort both on and off the job, as well as shocks that lead to mismatch. We find a decrease in complementarities between labor and technology, driven mainly by a decline in the elasticity of labor. The decrease in the labor share is largest for workers with high school education only. Instead, changes in the shock process lead to a decrease in the frequency and a slight increase in the variance of those shocks. We show quantitatively that the changing nature of the technology contributes to the secular decline in labor market dynamism. Click here to view the CV.
		PRESENTER Jan Eeckhout Pompeu Fabra University University College London
		RESEARCH FIELDS Macroeconomics Labor Economics
		DATE: 28 November 2018 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903