Speed of Technical Progress and Length of the Average Interjob Period

Levy Economics Institute Working Paper No. 237

43 Pages Posted: 10 Oct 1998

See all articles by William J. Baumol

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies; Leonard N. Stern School of Business - Department of Economics

Edward N. Wolff

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER); Bard College - Levy Economics Institute

Date Written: May 1998

Abstract

The mean duration of unemployment has approximately doubled in the U.S. between the early 1950s and the mid-1990s, with most of the increase occurring since the early 1970s. We first construct a simple model linking the average duration of unemployment with the speed of technical change. Using aggregate time-series data for the U.S., we find strong evidence that both the rate of TFP growth and investment in office, computing, and accounting equipment (OCA) per employee have a significant positive effect on mean unemployment duration. Moreover, literally all of the two-thirds rise in mean unemployment duration between 1971 and 1994 (two similar points in the business cycle) can be attributed to increases in OCA investment.

JEL Classification: J64

Suggested Citation

Baumol, William J. and Wolff, Edward N., Speed of Technical Progress and Length of the Average Interjob Period (May 1998). Levy Economics Institute Working Paper No. 237, Available at SSRN: https://ssrn.com/abstract=101548 or http://dx.doi.org/10.2139/ssrn.101548

William J. Baumol (Contact Author)

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies ( email )

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Leonard N. Stern School of Business - Department of Economics

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Edward N. Wolff

New York University (NYU) - Department of Economics ( email )

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Bard College - Levy Economics Institute

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