Policy Analysis in a Matching Model with Intensive and Extensive Margins

34 Pages Posted: 6 Apr 2007 Last revised: 18 Jul 2010

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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Date Written: April 2007

Abstract

The large differences in hours of work across industrialized countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a standard matching model to produce a model in which both the intensive and extensive margins are operative. We then assess the implications of several policies for changes along the two margins. Firing taxes and entry barriers both lead to changes in hours and employment in opposite directions, while tax and transfer policies lead to decreases in both employment and hours per worker.

Suggested Citation

Fang, Lei and Rogerson, Richard, Policy Analysis in a Matching Model with Intensive and Extensive Margins (April 2007). NBER Working Paper No. w13007. Available at SSRN: https://ssrn.com/abstract=978400

Lei Fang (Contact Author)

Federal Reserve Bank of Atlanta ( email )

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Richard Rogerson

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

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National Bureau of Economic Research (NBER)

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

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