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Employment and Hours of Work

  • Noritaka Kudoh

    ()

    (Department of Economics, Hokkaido University)

  • Masaru Sasaki

    ()

    (Department of Economics, Osaka University)

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 the demand for working hours and the number of vacancies, and the hourly wage rate is determined by Nash bargaining. A firm increases the demand for hours as recruitment becomes more costly. Labor market tightness influences the composition of labor demand through its impact on the wage rate. Restricting working hours can expand employment, but doing so is not necessarily efficient. When there are two industries that differ in their equipment costs, workers employed by firms with higher equipment costs work longer and earn more.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0735.pdf
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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 07-35.

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Length: 28 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:osk:wpaper:0735
Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/
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