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Policy Analysis in a Matching Model with Intensive and Extensive Margins

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  • Lei Fang
  • Richard Rogerson

Abstract

The large differences in hours of work across industrialized countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a standard matching model to produce a model in which both the intensive and extensive margins are operative. We then assess the implications of several policies for changes along the two margins. Firing taxes and entry barriers both lead to changes in hours and employment in opposite directions, while tax and transfer policies lead to decreases in both employment and hours per worker.

Suggested Citation

  • Lei Fang & Richard Rogerson, 2007. "Policy Analysis in a Matching Model with Intensive and Extensive Margins," NBER Working Papers 13007, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:13007
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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