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Employment and Hours over the Business Cycle in a Model with Search Frictions

Noritaka Kudoh, Hiroaki Miyamoto and Masaru Sasaki
Additional contact information
Noritaka Kudoh: Department of Economics, Nagoya University
Masaru Sasaki: Graduate School of Economics, Osaka University

No CIRJE-F-1084, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper studies a large-firm search-matching model with variable hours of work to investigate how firms utilize the intensive and extensive margins of labor adjustment over the business cycle. Introduction of variable hours of work introduces the Frisch elasticity parameter into the analysis, and this is a key determinant of the magnitude of fluctuations in hours of work. The model replicates the observed cyclical behavior of the Japanese labor market, in which fluctuations in hours of work account for 79 percent of the variations in total labor input, well. Total labor input in the model is as volatile as that in the data, and is 25 times as volatile as that in the model without the intensive margin.

Pages: 57 pages
Date: 2018-04
New Economics Papers: this item is included in nep-bec and nep-dge
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http://www.cirje.e.u-tokyo.ac.jp/research/dp/2018/2018cf1084.pdf (application/pdf)

Related works:
Journal Article: Employment and Hours over the Business Cycle in a Model with Search Frictions (2019) Downloads
Working Paper: Employment and hours over the business cycle in a model with search frictions (2016) Downloads
Working Paper: Employment and Hours over the Business Cycle in a Model with Search Frictions (2015) Downloads
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