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EMPLOYMENT ADJUSTMENT AND LABOR UTILIZATION
Author(s) -
Trapeznikova Ija
Publication year - 2017
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12239
Subject(s) - margin (machine learning) , attrition , subsidy , workforce , labour economics , economics , danish , job creation , panel data , econometrics , computer science , medicine , linguistics , dentistry , machine learning , market economy , economic growth , philosophy
Standard models of labor adjustment assume that firms can change only the size of their workforce (the extensive margin) and not the number of hours of their existing employees (the intensive margin) in response to shocks. I propose a general equilibrium search model that allows for adjustment on both of these margins. The model includes on‐the‐job search that generates different vacancy filling and attrition rates across firms. I calibrate the model to a unique matched employer–employee panel of Danish firms and simulate two labor market policies aimed at promoting job creation: hiring subsidies and a reduction in the official workweek.