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Employment and hours of work

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  • Kudoh, Noritaka
  • Sasaki, Masaru

Abstract

This paper develops a dynamic model of the labor market in which the degree of substitution between employment and hours of work is determined as part of a search equilibrium. Each firm chooses its demand for working hours and number of vacancies, and the earnings profile is determined by Nash bargaining. The earnings profile is generally nonlinear in hours of work, and defines the trade-off between employment and hours of work. Concave production technology induces firms to overemploy and, as a result, hours of work are below their optimal level. The Hosios condition is not sufficient for efficiency. When there are two industries, workers employed by firms with higher recruitment costs work longer and earn more. That is, "good jobs" require longer hours of work. Interestingly, technology differentials cannot account for working hours differentials.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 2 (February)
Pages: 176-192

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:2:p:176-192

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Web page: http://www.elsevier.com/locate/eer

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Keywords: Employment Hours of work Search frictions;

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References

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Cited by:
  1. Keisuke Kawata, 2013. "Work Hour Mismatch and On-the-job Search," IDEC DP2 Series 3-6, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).

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