Designing the Optimal Length of Working Time
How many hours per week should workers in the United States and Germany spend at their paying jobs? The present paper addresses this question by constructing policymakers’ reaction functions capable of modelling the optimal length of working time as a function of the relevant labour market variables. The empirical analysis is based on the optimal control algorithm. Given a policymaker’s loss function and a structural model of the labour market we define alternative specifications of reaction functions where the response coefficients indicate how policymakers should react to any news in the labour market in order to stabilize employment and wages. We also perform a comparative analysis on the ability of the rules to correspond to historical working-time records. The results suggest that simple rules perform quite well and that the advantages obtained from adopting an optimal control-based rule are not so great. Moreover, the analysis emphasizes the success of the wage-based rule and of the employment based rule in the US and Germany, respectively. Finally, we propose a policy rule to capture the dynamics of the weekly working hours. According to our rule the length of the workweek is an inverse function of the deviation between the actual and potential employment level.
|Date of creation:||Jan 2005|
|Contact details of provider:|| Postal: via Giovanni Paolo II, 132, 84084 - Fisciano (SA), ITALY|
Phone: +39 089 962152 -
Fax: +39 089 962049
Web page: http://www.celpe.unisa.it
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sal:celpdp:91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paolo Coccorese)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.