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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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File URL: http://hdl.handle.net/2115/35611
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File URL: http://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/35611/1/DPA204.pdf
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Bibliographic Info

Paper provided by Graduate School of Economics and Business Administration, Hokkaido University in its series Discussion paper series. A with number 204.

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Length: 34 pages
Date of creation: 18 Feb 2009
Date of revision:
Handle: RePEc:hok:dpaper:204

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Related research

Keywords: employment; hours of work; search frictions; J21; J23; J31; J64;

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References

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  1. Cahuc, Pierre & Marque, François & Wasmer, Etienne, 2004. "A Theory of Wages and Labour Demand with Intra-firm Bargaining and Matching Frictions," CEPR Discussion Papers 4605, C.E.P.R. Discussion Papers.
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  25. Bertola, Giuseppe & Garibaldi, Pietro, 2000. "Wages and the Size of Firms in Dynamic Matching Models," CEPR Discussion Papers 2576, C.E.P.R. Discussion Papers.
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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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