We study the effects of technology shocks on labor market dynamics. We provide evidence that a positive technology shock leads to a weak response in nominal wage inflation, a modest decline in price inflation, and a modest rise in the real wage on impact and a permanent rise in the long run. The...

The sticky-price theory has proved fairly successful in explaining the dynamic effects of technology shocks on employment, at least under weak accommodation of monetary policy to the shocks. Yet, when we extend the analysis to a broader set of labor market variables, including employment as well...