Productivity Growth Shocks and Unemployment in the Postwar US Economy

In recent years growing attention has been paid to the dynamic interaction between productivity growth and unemployment in the US economy. In this paper we aim to investigate the effects of productivity growth shocks on unemployment, both in the short run and in the medium - long run. We adopt a structural VAR approach and find that, in the last decades, productivity shocks have exerted persistent effects on unemployment. Moreover, these shocks have played an important role in explaining the fluctuations in the unemployment rate at different frequencies. This conclusion seems to be robust to alternative identification strategies of the structural shocks.