NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Lei Fang

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Working Papers

April 2007Policy Analysis in a Matching Model with Intensive and Extensive Margins
with Richard Rogerson: w13007
The large differences in hours of work across industrialized countries reflect large differences in both employment to population ratios and hours per worker. We imbed the canonical model of labor supply into a standard matching model to produce a model in which both the intensive and extensive margins are operative. We then assess the implications of several policies for changes along the two margins. Firing taxes and entry barriers both lead to changes in hours and employment in opposite directions, while tax and transfer policies lead to decreases in both employment and hours per worker.
February 2007Product Market Regulation and Market Work: A Benchmark Analysis
with Richard Rogerson: w12891
Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark aggregate model of time allocation. We find that product market regulations affect time devoted to market work in effectively the same fashion as do taxes on labor income or consumption. In particular, if product market regulations are to affect aggregate market work in this model the key driving force is the size of income transfers associated with the regulation relative to labor income, and the key propagation mechanism is the labor supply elasticity. We show in a two sector model that industry level analysis is of little help in assessing the aggregate effects of product market regulation.

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