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Author: | Marimon, R. Zilibotti, F. |
Title: | Employment and distributional effects of restricting working time |
Journal: | European Economic Review
2000 : JUN, VOL. 44:7, p. 1291-1326 |
Index terms: | Leisure Unemployment Pay Hours of work Work sharing Models |
Language: | eng |
Abstract: | This paper studies the employment and distributional effects of regulating working time in a general equilibrium model with search-matching frictions. Job creation entails fixed costs, but existing jobs are subject to diminishing returns. It is characterized the equilibrium in the de-regulated economy where firms and individual workers freely negotiate wages and hours. The effects of a legislation restricting the maximum working time are considered. Employment effects are sensitive to the representation of preferences. In this paper's benchmark, small reductions in working time, starting from the laissez-faire equilibrium solution, always result in small increase in the equilibrium employment, while larger reductions reduce employment. The regulation benefits workers, both unemployed and employed but reduces profits and output. |
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