Arbeitspapier

The intensive margin puzzle and labor market adjustment costs

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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.

Language: Englisch

Bibliographic citation: Series: Kiel Working Paper ; No. 1701

Classification: Wirtschaft
Econometric and Statistical Methods and Methodology: General
Business Fluctuations; Cycles
Labor Contracts

Subject: Adjustment Costs
Extensive Margin
Intensive Margin
Kündigungsschutz
Arbeitsmarkt
Anpassungskosten
Arbeitszeit
Real Business Cycle
Theorie
USA

Event: Geistige Schöpfung

(who): Wesselbaum, Dennis

Event: Veröffentlichung

(who): Kiel Institute for the World Economy (IfW)

(where): Kiel

(when): 2011

Handle: http://hdl.handle.net/10419/45884

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Wesselbaum, Dennis
Kiel Institute for the World Economy (IfW)

Time of origin

2011

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