The Dynamics of Hours Worked and Technology

33 Pages Posted: 6 Nov 2012

See all articles by Cristiano Cantore

Cristiano Cantore

University of Surrey; Bank of England

Filippo Ferroni

Federal Reserve Bank of Chicago

Miguel A. León-Ledesma

affiliation not provided to SSRN

Date Written: November 5, 2012

Abstract

We study the relationship between hours worked and technology during the postwar period in the US. We show that the responses of hours to technological improvements have increased over time, and that the patterns captured by the SVAR are consistent with those obtained from an RBC model with a less than unitary elasticity of substitution between capital and labor. Data supports the hypothesis that the observed changes in the response of hours to a technology shock are attributable to changes in the magnitude of the degree of capital-labor substitution, o. We argue that the observed time-variation in o can arise from changes in the structural composition of sectors (or factors) in a heterogeneous inputs production function or from biases in technological change.

Keywords: Real Business Cycles models, constant elasticity of substitution production function, hours worked, technology shocks

JEL Classification: E32, E37, C53

Suggested Citation

Cantore, Cristiano and Ferroni, Filippo and León-Ledesma, Miguel A., The Dynamics of Hours Worked and Technology (November 5, 2012). Banco de Espana Working Paper No. 1238, Available at SSRN: https://ssrn.com/abstract=2171202 or http://dx.doi.org/10.2139/ssrn.2171202

Cristiano Cantore (Contact Author)

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Filippo Ferroni

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Miguel A. León-Ledesma

affiliation not provided to SSRN

No Address Available

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