Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/45884
Authors: 
Wesselbaum, Dennis
Year of Publication: 
2011
Series/Report no.: 
Kiel Working Paper 1701
Abstract: 
This paper documents a puzzling fact, namely that there is a significant negative relation between employment protection legislation and the usage of the intensive margin of labor market adjustments. We then make use of a Real Business Cycle model and introduce search and matching frictions as well as adjustment costs along the extensive and the intensive labor market margins. We show that the model is able to replicate the observed pattern, if we assume low firing costs and relatively large hours adjustment costs. Furthermore, the model requires those values to replicate the U.S. business cycle statistics.
Subjects: 
Adjustment Costs
Extensive Margin
Intensive Margin
JEL: 
C10
E32
J41
Document Type: 
Working Paper

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