How Important is the Intensive Margin of Labor Adjustment?

• Authors: Thijs van Rens.
• BSE Working Paper: 579 | September 15
• Keywords: hours worked , intensive margin labor adjustment
• JEL codes: E24 E32
• hours worked
• intensive margin labor adjustment

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 nd 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.