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Employment and hours of work

Listed author(s):
  • Kudoh, Noritaka
  • Sasaki, Masaru

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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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
Handle: RePEc:hok:dpaper:204
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  20. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
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  25. Cahuc, Pierre & Wasmer, Etienne, 2001. "Does Intrafirm Bargaining Matter In The Large Firm'S Matching Model?," Macroeconomic Dynamics, Cambridge University Press, vol. 5(05), pages 742-747, November.
  26. Fonseca, Raquel & Lopez-Garcia, Paloma & Pissarides, Christopher A., 2001. "Entrepreneurship, start-up costs and employment," European Economic Review, Elsevier, vol. 45(4-6), pages 692-705, May.
  27. Hoel, Michael, 1986. "Employment and Allocation Effects of Reducing the Length of the Workday," Economica, London School of Economics and Political Science, vol. 53(29), pages 75-85, February.
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  30. 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 237-248, May.
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