Bargaining Frictions and Hours Worked

36 Pages Posted: 8 Sep 2005

See all articles by Stéphane Auray

Stéphane Auray

CREST-Ensai

Samuel Danthine

École Nationale de la Statistique et de l'Analyse de l'Information (ENSAI)

Date Written: August 2005

Abstract

A matching model with labor/leisure choice and bargaining frictions is used to explain (i) differences in GDP per hour and GDP per capita, (ii) differences in employment, (iii) differences in the proportion of part-time work across countries. The model predicts that the higher the level of rigidity in wages and hours the lower are GDP per capita, employment, part-time work and hours worked, but the higher is GDP per hours worked. In addition, it predicts that a country with a high level of rigidity in wages and hours and a high level of income taxation has higher GDP per hour and lower GDP per capita than a country with less rigidity and a lower level of taxation. This is due mostly to a lower level of employment. In contrast, a country with low levels of rigidity in hour and in wage setting but with a higher level of income taxation has a lower GDP per capita and a higher GDP per hour than the economy with low rigidity and low taxation, because while the level of employment is similar in both economies, the share of part-time work is larger.

Keywords: models of search and matching, bargaining frictions, economic performance, labor market institutions, part-time jobs, labor market rigidities

JEL Classification: E24, J22, J30, J41, J50, J64

Suggested Citation

Auray, Stéphane and Danthine, Samuel, Bargaining Frictions and Hours Worked (August 2005). IZA Discussion Paper No. 1722. Available at SSRN: https://ssrn.com/abstract=799706

Stéphane Auray

CREST-Ensai ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Samuel Danthine (Contact Author)

École Nationale de la Statistique et de l'Analyse de l'Information (ENSAI) ( email )

Rennes Métropole - Campus de Ker Lann
Rue Blaise Pascal
BP 37203- 35172 BRUZ Cedex
France

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
50
Abstract Views
880
PlumX Metrics