Working Time and Employment under Uncertainty

28 Pages Posted: 11 Sep 2002  

Yu-Fu Chen

University of Dundee - Department of Economic Studies

Michael Funke

University of Hamburg - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 2002

Abstract

The standard literature on working time has modeled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we consider the impact of uncertainty and real options on the decision of working time, i.e. we examine the determinants of employment and hours in a stochastic framework. We conclude the theoretical analysis with a number of simulation exercises to illustrate the working of the model.

Keywords: Real Options, Uncertainty, Working Time, Employment, Labor Demand

JEL Classification: D81, E24, J23

Suggested Citation

Chen, Yu-Fu and Funke, Michael, Working Time and Employment under Uncertainty (May 2002). CESifo Working Paper Series No. 732. Available at SSRN: https://ssrn.com/abstract=318350

Yu-Fu Chen

University of Dundee - Department of Economic Studies ( email )

Dundee DD1 4HN, Scotland
United Kingdom
+44 1382 344 383 (Phone)
+44 1382 344 691 (Fax)

Michael Funke (Contact Author)

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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