Total Factor Productivity Growth and Employment: A Simultaneous Equations Model Estimate

TitleTotal Factor Productivity Growth and Employment: A Simultaneous Equations Model Estimate
Publication TypeWorking Paper
Year of Publication2005
AuthorsMG. Ladu
Number2005_06
Keywordsemployment, job creation, job de-struction, total factor productivity
Abstract

This paper provides a structural estimation of the recent model proposed by Pissarides and Vallanti, a simplified equilibrium model which draws heavily on models with frictions and quasi-rents. The structural model is a system of three equations. The estimation method is a three-stage least squares. My empirical results find that although faster TFP growth temporarily decreases employment, most likely be- cause job destruction reacts faster to schocks than job creation does, after the first year I do not find any statistically significant effect of growth on employment.

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