Technology shocks and hours worked: Checking for robust conclusions

• Published in: Journal of macroeconomics Vol. 31; no. 2; pp. 231 - 239
• Main Author: Whelan, Karl T.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Inc 01-06-2009; Elsevier; Elsevier Science Ltd
• Series: Journal of Macroeconomics
• Subjects: Business cycles; Hours of work; Labour productivity; Production functions; Productivity; Productivity growth; Regression analysis; Stochastic models; Studies; Technological change; U.S.A; Vector-autoregressive models; United States > US; E32; C32
• ISSN: 0164-0704; 1873-152X
• DOI: 10.1016/j.jmacro.2008.06.003

This paper presents some new results on the effects of technology shocks on hours worked based on structural VAR specifications containing various measures of US productivity growth and hours. These specifications can produce different answers depending on which sector of the economy is examined, which transformation of hours worked is used, and on how many lags are chosen for the VAR. However, it is shown that the results from the stochastic trend specification used by Galí [Galí, Jordi., 1999. Technology, employment and the business cycle: do technology shocks explain aggregate fluctuations. American Economic Review, 89, 249–271] are robust across changes in data definition and lag length, while the results from the
per capita hours specification of Christiano, Eichenbaum, and Vigfusson [Christiano, Lawrence., Eichenbaum, M., Vigfusson, R., 2003. What happens after a technology shock? Federal Reserve Board, International Finance Discussion Paper, 2003, p. 768] are not. These results provide support for Galí’s findings that technology shocks have a negative impact effect on hours worked and that these shocks play a limited role in generating the business cycle.