Employment and hours over the business cycle in a model with search frictions

Noritaka Kudoh, Hiroaki Miyamoto and Masaru Sasaki ()
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Masaru Sasaki: Osaka University

No SDES-2016-9, Working Papers from Kochi University of Technology, School of Economics and Management

Abstract: This paper studies a labor market search-matching model with multi-worker firms to investigate how firms utilize employment and hours of work over the business cycle. The earnings function derived from intra-firm bargaining determines the costs of utilizing the two margins of labor adjustment. We calibrate the model for the Japanese labor market, in which fluctuations in hours of work account for 79 percent of the variations in total labor input. The model replicates much of the fluctuations in total labor input, employment, and hours per employee without wage rigidity even though the source of fluctuations is total factor productivity (TFP) alone. If hours of work are determined by bargaining, then the intensive margin makes the unemployment volatility puzzle much harder to resolve.

Keywords: search; hours of work; employment; business cycles; multi-worker firms (search for similar items in EconPapers)
JEL-codes: E32 J20 J64 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2016-06, Revised 2016-06
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mac
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Published in SDE Series, June 2016, pages 1-47

Downloads: (external link)
http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2016-9.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: Employment and Hours over the Business Cycle in a Model with Search Frictions (2019)
Working Paper: Employment and Hours over the Business Cycle in a Model with Search Frictions (2018)
Working Paper: Employment and Hours over the Business Cycle in a Model with Search Frictions (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:kch:wpaper:sdes-2016-9

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