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Extensive vs. Intensive Margin in Germany and the United States: Any Differences?

  • Merkl, Christian

    ()

    (University of Erlangen-Nuremberg)

  • Wesselbaum, Dennis

    ()

    (Kiel Institute for the World Economy)

This paper analyzes the role of the extensive vis-à-vis the intensive margin of labor adjustment in Germany and in the United States. The contribution is twofold. First, we provide an update of older U.S. studies and confirm the view that the extensive margin (i.e., the adjustment in the number of workers) explains the largest part in the overall variability in aggregate hours. Second, although the German labor market structure is very different from its U.S. counterpart, the quantitative importance of the extensive margin is of similar magnitude.

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File URL: http://ftp.iza.org/dp5117.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5117.

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Length: 9 pages
Date of creation: Aug 2010
Date of revision:
Publication status: published in: Applied Economics Letters. 2011, 18 (9), 805 - 808
Handle: RePEc:iza:izadps:dp5117
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  1. Wolfgang Lechthaler & Christian Merkl & Dennis Snower, 2008. "Monetary Persistence and the Labor Market: A New Perspective," Kiel Working Papers 1409, Kiel Institute for the World Economy.
  2. Shigeru Fujita & Garey Ramey, 2009. "The Cyclicality Of Separation And Job Finding Rates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 415-430, 05.
  3. Hermann Gartner & Christian Merkl & Thomas Rothe, 2009. "They Are Even Larger! More (on) Puzzling Labor Market Volatilities," Kiel Working Papers 1545, Kiel Institute for the World Economy.
  4. Langot, François & Quintero Rojas, Coralia, 2008. "Explaining the Evolution of Hours Worked and Employment across OECD Countries: An Equilibrium Search Approach," IZA Discussion Papers 3364, Institute for the Study of Labor (IZA).
  5. Krause, M.U. & Lubik, T.A., 2003. "The (Ir)relevance of Real Wage Rigidity in the New Keynesian Model with Search Frictions," Discussion Paper 2003-113, Tilburg University, Center for Economic Research.
  6. Gary Hansen, 2010. "Indivisible Labor and the Business Cycle," Levine's Working Paper Archive 233, David K. Levine.
  7. François Langot & Coralia Quintero-Rojas, 2009. "European vs American Hours Worked: assessing the role of the extensive and intensive margins," Economics Bulletin, AccessEcon, vol. 29(2), pages 530-542.
  8. Richard Rogerson, 2006. "Understanding Differences in Hours Worked," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 365-409, July.
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