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POLICY ANALYSIS IN A MATCHING MODEL WITH INTENSIVE AND EXTENSIVE MARGINS *
Author(s) -
Fang Lei,
Rogerson Richard
Publication year - 2009
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/j.1468-2354.2009.00563.x
Subject(s) - matching (statistics) , economics , work (physics) , margin (machine learning) , labour economics , population , demographic economics , computer science , statistics , mathematics , demography , engineering , mechanical engineering , machine learning , sociology
The large differences in hours of work across rich countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a matching model to produce a model with operative intensive and extensive margins, and assess the implications of several policies for changes along the two margins. Tax and transfer policies lead to decreases along both margins, whereas regulations that increase the cost of creating or maintaining a job may lead to decreases in employment, but necessarily lead to increases in hours per worker.