Two essays on productivity, aggregate shocks, and job flows
Abstract
Chapter one . This chapter presents theory and evidence on the relationship between cyclical shocks and productivity growth. First, it analyzes the roles of a cyclically varying real interest rate and supply shocks in a world where Productivity Improving Activities are disruptive. The model predicts that temporary demand downturns may have positive productivity effects if the real interest rate is not too countercyclical. Second, it tests the implications of the model using quarterly data from 1972:1 to 1992:4 for twenty two-digit SIC US manufacturing industries and a set of monetary policy, fiscal policy, and oil price shocks. The chapter uses as a measure of productivity change a 'corrected' Solow residual, and allows for a wide range of non-technological effects due to imperfect-competition, non-constant returns to scale, and cyclical utilization rates of capital and labor services. The empirical framework identifies policy shocks independently of productivity measurement issues via a two-step procedure. While the typical industry shows weak responses of productivity to the shocks considered, there are instances (industries-shocks pairs) where temporary contractionary policy shocks lead to increases in productivity. In addition, the data reveal that there are localized asymmetries, with contractionary policy shocks having larger productivity effects than their expansionary counterparts. The data do not dismiss the idea that job reallocation is an important channel linking contractionary policy shocks and productivity. These results support the "pit-stop" view of downturns. Chapter two . Borrowing from the most recent literature on dynamic matching models, this chapter proposes and develops a model à la Mortensen and Pissarides (1994, 1999a, 1999b) where firms respond to idiosyncratic and aggregate shocks by upgrading, creating, and destroying jobs. By allowing firms to invest in the productivity of existing jobs, the chapter sheds light on: (i) the impact of labor market policy on the economy's rates of job upgrading, job creation and job destruction; (ii) the impact of labor market policy on the response of the job upgrading rate to aggregate shocks; and (iii) the impact of training policy on labor market equilibrium outcomes.
Recommended Citation
Antonio Gomes Menezes,
"Two essays on productivity, aggregate shocks, and job flows"
(January 1, 2000).
Boston College Dissertations and Theses.
Paper AAI9981622.
http://escholarship.bc.edu/dissertations/AAI9981622
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