Employment and hours of work

Noritaka Kudoh and Masaru Sasaki ()

European Economic Review, 2011, vol. 55, issue 2, 176-192

Abstract: 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 its demand for working hours and number of vacancies, and the earnings profile is determined by Nash bargaining. The earnings profile is generally nonlinear in hours of work, and defines the trade-off between employment and hours of work. Concave production technology induces firms to overemploy and, as a result, hours of work are below their optimal level. The Hosios condition is not sufficient for efficiency. When there are two industries, workers employed by firms with higher recruitment costs work longer and earn more. That is, "good jobs" require longer hours of work. Interestingly, technology differentials cannot account for working hours differentials.

Keywords: Employment; Hours; of; work; Search; frictions (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Employment and hours of work (2009)
Working Paper: Employment and Hours of Work (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:55:y:2011:i:2:p:176-192

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