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Working time regulation in a search economy with worker moral hazard

  • Rocheteau, Guillaume

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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File URL: http://www.sciencedirect.com/science/article/B6V76-45WFTWX-4/2/aaa37a017f0e8d155bd5b91d394e8dc2
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 84 (2002)
Issue (Month): 3 (June)
Pages: 387-425

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Handle: RePEc:eee:pubeco:v:84:y:2002:i:3:p:387-425
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  2. Askenazy, Philippe, 2000. "35 heures: contrainte et laissez-faire," CEPREMAP Working Papers (Couverture Orange) 0002, CEPREMAP.
  3. James B. Rebitzer & Lowell J. Taylor, 1991. "Do Labor Markets Provide Enough Short Hour Jobs? An Analysis of Work Hours and Work Incentives," NBER Working Papers 3883, National Bureau of Economic Research, Inc.
  4. Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, vol. 27(3), pages 293-309.
  5. Brunello, Giorgio, 1989. "The Employment Effects of Shorter Working Hours: An Application to Japanese Data," Economica, London School of Economics and Political Science, vol. 56(224), pages 473-86, November.
  6. Marimon, R. & Zilibotti, F., 1999. "Employment and Distributional Effects of Restricting Working Time," Economics Working Papers eco99/19, European University Institute.
  7. Ellingsen, T. & Rosen, A., 1997. "Fixed or Flexible? Wage Setting in Search Equilibrium," Papers 1997-17, Uppsala - Working Paper Series.
  8. Booth, Alison & Schiantarelli, Fabio, 1987. "The Employment Effects of a Shorter Working Week," Economica, London School of Economics and Political Science, vol. 54(214), pages 237-48, May.
  9. Hunt, Jennifer, 1997. "Has Work Sharing Worked in Germany?," CEPR Discussion Papers 1553, C.E.P.R. Discussion Papers.
  10. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  11. Tor Jacobson & Henry Ohlsson, 2000. "Working time, employment, and work sharing: Evidence from Sweden," Empirical Economics, Springer, vol. 25(1), pages 169-187.
  12. Booth, Alison & Ravallion, Martin, 1993. "Employment and Length of the Working Week in a Unionized Economy in which Hours of Work Influence Productivity," The Economic Record, The Economic Society of Australia, vol. 69(207), pages 428-36, December.
  13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  14. Rocheteau, Guillaume, 1999. "Balanced-Budget Rules and Indeterminacy of the Equilibrium Unemployment Rate," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 399-409, July.
  15. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 339-381.
  16. Hoel, Michael & Vale, Bent, 1986. "Effects on unemployment of reduced working time in an economy where firms set wages," European Economic Review, Elsevier, vol. 30(5), pages 1097-1104, October.
  17. Boaz Moselle, 1996. "Efficiency Wages and the Hours/Unemployment Trade-Off," Discussion Papers 1153, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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