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Working Time and Employment under Uncertainty

  • Yu-Fu Chen
  • Michael Funke

The standard literature on working time has modelled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we consider the impact of uncertainty and real options on the decision of working time, i.e. we examines the determinants of employment and hours in a stochastic framework. We conclude the theoretical analysis with a number of simulation exercises to illustrate the working of the model.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 732.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ces:ceswps:_732
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  1. Bovenberg, A.L. & Graafland, J.J. & de Mooij, R.A., 2000. "Tax reform and the Dutch labour market : An applied general equilibrium approach," Other publications TiSEM a22f887a-ce1a-4aa2-ad01-6, Tilburg University, School of Economics and Management.
  2. Chen, Yu-Fu & Zoega, Gylfi, 1999. "On the effectiveness of firing costs1," Labour Economics, Elsevier, vol. 6(3), pages 335-354, September.
  3. Bauer, Thomas & Zimmermann, Klaus F, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-36, September.
  4. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
  5. 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.
  6. Alison L. Booth & Yu-Fu Chen & Gylfi Zoega, 2002. "Hiring and Firing: A Tale of Two Thresholds," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 217-248, Part.
  7. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  8. Pissarides, Christopher A., 1998. "The impact of employment tax cuts on unemployment and wages; The role of unemployment benefits and tax structure," European Economic Review, Elsevier, vol. 42(1), pages 155-183, January.
  9. Marimon, Ramon & Zilibotti, Fabrizio, 2000. "Employment and distributional effects of restricting working time," European Economic Review, Elsevier, vol. 44(7), pages 1291-1326, June.
  10. G Houpis, 1993. "The Effect of Lower Hours of Work on Wages and Employment," CEP Discussion Papers dp0131, Centre for Economic Performance, LSE.
  11. Trejo, Stephen J, 1993. "Overtime Pay, Overtime Hours, and Labor Unions," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 253-78, April.
  12. Una-Louise Bell, 1996. "Adjustment Costs, Uncertainty and Employment Inertia," Banco de Espa�a Working Papers 9620, Banco de Espa�a.
  13. Caballero, Ricardo J, 1991. "On the Sign of the Investment-Uncertainty Relationship," American Economic Review, American Economic Association, vol. 81(1), pages 279-88, March.
  14. repec:oup:restud:v:57:y:1990:i:3:p:381-402 is not listed on IDEAS
  15. Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, vol. 27(3), pages 293-309.
  16. Calmfors, Lars & Hoel, Michael, 1989. "Work Sharing, Employment and Shiftwork," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 758-73, October.
  17. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
  18. FitzRoy, Felix R. & Funke, Michael & Nolan, Michael A., 2002. "Working time, taxation and unemployment in general equilibrium," European Journal of Political Economy, Elsevier, vol. 18(2), pages 333-344, June.
  19. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 45-62.
  20. Felix R. FitzRoy & Michael Funke & Michael A. Nolan, 1999. "Working Time, Taxation and Unemployment," Discussion Paper Series, Department of Economics 199901, Department of Economics, University of St. Andrews.
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