Productivitygrowth,on-the-jobsearch,andunemployment$

The impactoflong-runproductivitygrowthonunemploymentisstudied.Weincorpo- rate disembodiedtechnologicalprogressandon-the-jobsearchintotheendogenousjob separationmodelof MortensenandPissarides(1994). Becauseweincludeon-the-job search,fastergrowthreducesunemploymentbydecreasingjobseparationandinducing job creation.Theincorporationofon-the-jobsearchsubstantiallyimprovestheabilityof the MortensenandPissaridesmodeltoexplaintheeffectofgrowthonlabormarket variables.Specifically,ourmodelgeneratesnotonlyanempiricallyconsistentsignofthe effect,butalsoalargerimpactofgrowthonunemploymentthanthestandard matchingmodel.