Technological Shocks and Employment: A Pick from the RBC Theory

This chapter provides an analysis of the real business cycle (RBC) theory and its implications for employment in the context of technological advancements. It examines the criticisms of the RBC theory, particularly regarding the impact of technology on recessions, and presents the responses put forth by RBC proponents. Additionally, the chapter investigates the relationship between technology shocks and employment, considering different viewpoints and empirical evidence. The findings suggest that while technology can lead to job displacement in certain sectors, it also contributes to overall economic growth and employment opportunities. The chapter concludes by discussing the proposed solutions advocated by RBC theorists, emphasizing the importance of minimizing government regulations and promoting a deregulated economy to mitigate economic recessions.