Paper #1285

Title:

How important is the intensive margin of labor adjustment?

Author:

Thijs van Rens

Date:

June 2011 (Revised: October 2011)

Abstract:

Using new quarterly data for hours worked in OECD countries, Ohanian and Raffo (2011) argue that in many OECD countries, particularly in Europe, hours per worker are quantitatively important as an intensive margin of labor adjustment, possibly because labor market frictions are higher than in the US. I argue that this conclusion is not supported by the data. Using the same data on hours worked, I find evidence that labor market frictions are higher in Europe than in the US, like Ohanian and Raffo, but also that these frictions seem to affect the intensive margin at least as much as the extensive margin of labor adjustment.

Keywords:

hours worked, intensive margin labor adjustment

JEL codes:

E24 E32

Area of Research:

Macroeconomics and International Economics / Labour, Public, Development and Health Economics

Published in:

Journal of Monetary Economics, 59 (1), 59 (1). January 2012

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