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- Title
Intertemporal Labour Supply with Search Frictions.
- Authors
Michelacci, Claudio; Pijoan-Mas, Josep
- Abstract
Starting in the 1970's, wage inequality and the number of hours worked by employed U.S. prime-age male workers have both increased. We argue that these two facts are related. We use a labour market model with on-the-job search where by working longer hours individuals acquire greater skills. Since job candidates are ranked by productivity, greater skills not only increase worker's productivity in the current job but also help the worker to obtain better jobs. When job offers become more dispersed, wage inequality increases and workers work longer hours to obtain better jobs. As a result, average hours per worker in the economy increase. This mechanism accounts for around two-thirds of the increase in hours observed in data. Part of the increase is inefficient since workers obtain better jobs at the expense of other workers competing for the same jobs.
- Subjects
UNITED States; EMPLOYMENT of men; WAGES; LABOR market; WAGES &; labor productivity; JOB skills; HUMAN capital
- Publication
Review of Economic Studies, 2012, Vol 79, Issue 3, p899
- ISSN
0034-6527
- Publication type
Article
- DOI
10.1093/restud/rdr042