Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33360
Authors: 
Auray, Stéphane
Danthine, Samuel
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1722
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.
Subjects: 
model of search and matching
bargaining frictions
economic performance
labor market institutions
part-time jobs
labor market rigidities
JEL: 
E24
J22
J30
J41
J50
J64
Document Type: 
Working Paper

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