Explaining the Evolution of Hours Worked and Employment across OECD Countries: An Equilibrium Search Approach

Francois Langot and Coralia Azucena Quintero Rojas

No 3364, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Since 1960, the dynamics of the aggregate hours of market work exhibit dramatic differences across industrialized countries. Before 1980, these differences seem to come from the hours worked per employee (the intensive margin). However, since 1980 a notable feature of the data is that the divergence across countries responds to quantitatively important differences along the employment rate (the extensive margin). In this paper we develop an equilibrium matching model where both margins are endogenous. The model is rich enough to account for the behavior of the two margins of the aggregate hours when we include the observed heterogeneity across countries of both the taxes and the labor market institutions such as the unemployment benefits and the bargaining power. Because these findings come from an unified framework, they also give a strong support to the matching models.

Keywords: taxation; intensive and extensive margins; labor market institutions; hours worked; matching model (search for similar items in EconPapers)
JEL-codes: E2 J2 J6 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2008-02
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - updated version published as 'Explaining labor wedge trends: An equilibrium search approach' in: European Journal of Comparative Economics, 2016, 13 (1), 3 - 35

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