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The Effects of Labor Market Conditions on Working Time: the US-EU Experience

Claudio Michelacci () and Josep Pijoan-Mas

No 6314, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We consider a labor market search model where, by working longer hours, individuals acquire greater skills and thereby obtain better jobs. We show that job inequality, which leads to within-skill wage differences, gives incentives to work longer hours. By contrast, a higher probability of losing jobs, a longer duration of unemployment, and in general a less tight labor market discourage working time. We show that the different evolution of labor market conditions in the US and in Continental Europe over the last three decades can quantitatively explain the diverging evolution of the number of hours worked per employee across the two sides of the Atlantic. It can also explain why the fraction of prime age male workers working very long hours has increased substantially in the US, after reverting a trend of secular decline.

Keywords: Wage inequality; Unemployment; Search; Working hours; Human capital (search for similar items in EconPapers)
JEL-codes: E24 G31 J31 (search for similar items in EconPapers)
Date: 2007-05
New Economics Papers: this item is included in nep-dge, nep-eec, nep-hrm, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: The Effects of Labor Market Conditions on Working Time: the US-EU Experience (2008) Downloads
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