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Extensive vs. Intensive Margin in Germany and the United States: Any Differences?

9 Pages Posted: 24 Aug 2010  

Christian Merkl

Kiel Institute for the World Economy; University of Kiel; IZA Institute of Labor Economics

Dennis Wesselbaum

affiliation not provided to SSRN

Abstract

This paper analyzes the role of the extensive vis-à-vis the intensive margin of labor adjustment in Germany and in the United States. The contribution is twofold. First, we provide an update of older U.S. studies and confirm the view that the extensive margin (i.e., the adjustment in the number of workers) explains the largest part in the overall variability in aggregate hours. Second, although the German labor market structure is very different from its U.S. counterpart, the quantitative importance of the extensive margin is of similar magnitude.

Keywords: business cycle, extensive and intensive margin, variance decomposition

JEL Classification: C10, E32, J21

Suggested Citation

Merkl, Christian and Wesselbaum, Dennis, Extensive vs. Intensive Margin in Germany and the United States: Any Differences?. IZA Discussion Paper No. 5117. Available at SSRN: https://ssrn.com/abstract=1663137

Christian Merkl (Contact Author)

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

IZA Institute of Labor Economics ( email )

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

Dennis Wesselbaum

affiliation not provided to SSRN

No Address Available

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