Do Technology Shocks Lead to a Fall in Total Hours Worked?”

Abstract This paper contributes to the debate initiated by Galí in 1999. I provide a theory with capital income taxation, labor hoarding as well as long-run shifts in the social attitudes to the workplace-modelled as "leisure at the workplace"-to argue that there are other shocks that may influence labor productivity in the long run. I introduce "medium-run identification" and show it to be superior to long-run identification or standard short-run identification, when applied to artificial data. With U.S. data and medium-run identification, I find the robust result that technology shocks lead to a hump-shaped response of total hours worked, which is mildly positive following a near-zero initial response. (JEL: E32, E24, C32, C15