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Employment and Hours over the Business Cycle in a Model with Search Frictions

Author

Listed:
  • Noritaka Kudoh

    (Department of Economics, Nagoya University)

  • Hiroaki Miyamoto

    (International Monetary Fund)

  • Masaru Sasaki

    (Graduate School of Economics, Osaka University)

Abstract

This paper studies a large-firm search-matching model with variable hours of work to investigate how firms utilize the intensive and extensive margins of labor adjustment over the business cycle. Introduction of variable hours of work introduces the Frisch elasticity parameter into the analysis, and this is a key determinant of the magnitude of fluctuations in hours of work. The model replicates the observed cyclical behavior of the Japanese labor market, in which fluctuations in hours of work account for 79 percent of the variations in total labor input, well. Total labor input in the model is as volatile as that in the data, and is 25 times as volatile as that in the model without the intensive margin.

Suggested Citation

  • Noritaka Kudoh & Hiroaki Miyamoto & Masaru Sasaki, 2018. "Employment and Hours over the Business Cycle in a Model with Search Frictions," CIRJE F-Series CIRJE-F-1084, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2018cf1084
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    Cited by:

    1. repec:ebl:ecbull:eb-17-00780 is not listed on IDEAS
    2. Miyamoto Hiroaki, 2016. "Growth and non-regular employment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 523-554, June.
    3. Lalé, Etienne, 2019. "Search and Multiple Jobholding," IZA Discussion Papers 12294, Institute of Labor Economics (IZA).
    4. Chun-Hung Kuo & Hiroaki Miyamoto, 2016. "Unemployment and Wage Rigidity in Japan: A DSGE Model Perspective," Working Papers EMS_2016_06, Research Institute, International University of Japan.
    5. Hiroaki Miyamoto, 2016. "Uncertainty shocks and labor market dynamics in Japan," Working Papers SDES-2016-8, Kochi University of Technology, School of Economics and Management, revised Jun 2016.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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