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

39 Pages Posted: 3 Nov 2008

See all articles by François Langot

François Langot

University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP); Université du Maine - Groupe d' Analyse des Itineraires et Niveaux Salariaux (GAINS); IZA Institute of Labor Economics

Coralia Quintero Rojas

Universidad de Guanajuato; GAINS-TEPP

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: hours worked, intensive and extensive margins, taxation, labor market institutions, matching model

JEL Classification: E2, J2, J6

Suggested Citation

Langot, Francois and Quintero Rojas, Coralia, Explaining the Evolution of Hours Worked and Employment Across OECD Countries: An Equilibrium Search Approach. IZA Discussion Paper No. 3364. Available at SSRN: https://ssrn.com/abstract=1294531 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Francois Langot (Contact Author)

University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP) ( email )

Ecole Normale Superieure
48 boulevard Jourdan
75014 Paris
France

Université du Maine - Groupe d' Analyse des Itineraires et Niveaux Salariaux (GAINS) ( email )

72085 Le Mans Cedex 9
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Coralia Quintero Rojas

Universidad de Guanajuato ( email )

Guanajuato
Mexico

GAINS-TEPP

72085 Le Mans Cedex 9
France

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