Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110158
Authors: 
Kudoh, Noritaka
Miyamoto, Hiroaki
Sasaki, Masaru
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8946
Abstract: 
This paper studies a labor market search-matching model with multi-worker firms to investigate how firms utilize the extensive and intensive margins over the business cycle. The earnings function derived from the Stole-Zwiebel bargaining acts as an adjustment cost function for employment and hours. We calibrate the model to match the Japanese labor market, in which the intensive margin accounts for 79% of the variations in total working hours. The model replicates the observed cyclical behavior of hours of work, but fails to generate employment volatility of realistic magnitude. Additional penalties for longer hours of work do not resolve this issue. Wage rigidity and persistent shocks are promising lines of further investigations.
Subjects: 
multi-worker firms
search
hours of work
business cycles
JEL: 
E32
J20
J64
Document Type: 
Working Paper

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