Money, labour supply, and growth in a liquidity costs economy

Abstract

Economists often compare two ways of work sharing : increase of part-time work and the reduction of the weekly work time. Most of the literature focuses upon the labour demand size. The aim of this paper is to tackle this question from the point of view of labour supply. We calibrate on French data a sequential job search model, which as two specific features : the characterization of job offers in terms of utility level which combines hourly wage rates with available leisure time and the fact that unemployment is not the only compatible state with a job search. Simulations of the model show that, for a given labour demand, the probability to be unemployed increases with the proportion of part-time jobs and decrease with the reduction of the weekly work time.