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Working time regulation in a search economy with worker moral hazard

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  • Rocheteau, Guillaume

Abstract

This paper analyzes the consequences of a working time reduction within a matching model with worker moral hazard. In the "laissez faire", workers and employers bargain over wages and working hours. When the no-shirking condition (NSC) is binding, the number of working hours is lower than the level that would be negotiated in the case of perfect monitoring and a work-sharing policy increases aggregate employment. At the opposite, for low unemployment countries, the NSC does not bind and a working time regulation always worsens the labour market situation.
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Suggested Citation

  • Rocheteau, Guillaume, 2002. "Working time regulation in a search economy with worker moral hazard," Journal of Public Economics, Elsevier, vol. 84(3), pages 387-425, June.
    • Handle: RePEc:eee:pubeco:v:84:y:2002:i:3:p:387-425
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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