Uniform Working Hours and Structural Unemployment

Haoming Liu, Yi Wen and Lijing Zhu
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Lijing Zhu: Department of Economics National University of Singapore Singapore 119260

Annals of Economics and Finance, 2007, vol. 8, issue 1, 113-136

Abstract: In this paper, we construct a simple model based on heterogeneity in workers¡¯ productivity and homogeneity in their working schedules. This simple model can generate unemployment, even if wages adjust instantaneously, firms are perfectly competitive, and firms can perfectly observe workers¡¯ productivity and effort. In our model, it is optimal for low-skilled workers to be unemployed because, on the one hand, firms do not find it optimal to hire low-skilled workers when labor hours must be synchronized across heterogeneous workers, and on the other hand, low-skilled workers do not find it attractive working for the same hours as high-skilled workers at competitive wages based on productivity. Thus our model offers an alternative explanation for why unskilled workers are a primary source of structural unemployment.

Keywords: Unemployment; Structural unemployment; Equilibrium unemployment; Synchronized working hours; Uniform working hours; Heterogeneous labor; Indivisible labor (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Uniform working hours and structural unemployment (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2007:v:8:i:1:p:113-136

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