Technology shocks and hours revisited: Evidence from household data

Abstract

I exploit heterogeneous impulse responses at the household level due to limited stock market participation to provide novel evidence on the degree of nominal rigidities. A number of studies show that positive technology shocks reduce aggregate hours. The finding is often interpreted as evidence in favor of sticky prices. Using the Consumer Expenditure Survey, I show that, while non-stockholders reduce hours in response to a positive technology shock, stockholders increase them. Aggregate hours fall because most households are non-stockholders. This finding is inconsistent with models featuring a high degree of nominal rigidities.