Policy Analysis in a Matching Model with Intensive and Extensive Margins

16 Pages Posted: 28 Oct 2009

See all articles by Lei Fang

Lei Fang

Federal Reserve Bank of Atlanta

Richard Rogerson

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER); Princeton University - Woodrow Wilson School of Public and International Affairs

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Abstract

The large differences in hours of work across rich countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a matching model to produce a model with operative intensive and extensive margins, and assess the implications of several policies for changes along the two margins. Tax and transfer policies lead to decreases along both margins, whereas regulations that increase the cost of creating or maintaining a job may lead to decreases in employment, but necessarily lead to increases in hours per worker.

Suggested Citation

Fang, Lei and Rogerson, Richard, Policy Analysis in a Matching Model with Intensive and Extensive Margins. International Economic Review, Vol. 50, Issue 4, pp. 1153-1168, November 2009. Available at SSRN: https://ssrn.com/abstract=1495271 or http://dx.doi.org/10.1111/j.1468-2354.2009.00563.x

Lei Fang

Federal Reserve Bank of Atlanta ( email )

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Richard Rogerson

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
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602-965-0748 (Fax)

National Bureau of Economic Research (NBER)

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Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
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United States

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