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Investment-specific technical progress, capital obsolescence and job creation

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  • del Rio, Fernando

Abstract

This paper shows that faster disembodied technological progress - if it is investment-specific - might reduce job creation because the obsolescence cost of capital increases, which reduces the net return of a job. This effect could be called the obsolescence effect. It is also shown that the increase in the rate of decline of the U.S. relative price of investment - which can be used as a proxy for the rate of investment-specific technical progress - may have increased the obsolescence costs of capital, which might account for the observed fall in U.S. vacancy-unemployment ratios and job finding rates after the mid-seventies.

Suggested Citation

  • del Rio, Fernando, 2010. "Investment-specific technical progress, capital obsolescence and job creation," Labour Economics, Elsevier, vol. 17(1), pages 248-257, January.
    • Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:248-257
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    Cited by:

    1. Fernando Rio & Antonio Sampayo, 2014. "Obsolescence and productivity," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 13(3), pages 195-216, December.

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