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Title: Inequality, Hours and Labor Market Participation

Citation Type: Working Paper

Publication Year: 2008

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Abstract: We consider a competitive equilibrium matching model where technologicalprogress is embodied in new jobs. Jobs are slowly created over time and in equilibriumthere is dispersion in job technologies. Workers can be employed in at mostone job. They decide on whether to participate in the labor market and on howmany hours to work when assigned to a job. This endogenously generates inequalityin wages and in labor supply. When the pace of technological progress acceleratesdifferences in job technologies widen. This increases wage inequality and workers decideto work less often but to supply longer hours once employed. The model canexplain the simultaneous fall in labor force participation and the increase in workinghours experienced by US male workers since the mid 70's. It can also explain thedifferential effects observed across skill groups.

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Authors: Michelacci, Claudio; Pijoan-Mas, Josep

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Institution: CEMFI

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Publisher Location: Madrid, Spain

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Poverty and Welfare

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