Standard working hours and labour supply in unemployment contexts

Abstract

This paper analyses the effects of exogenous changes in the length of standard working hours on labour supply decisions. within a setting characterised by individuals with heterogeneous preferences for consumption and leisure. and the existence of involuntary unemployment. In a recent paper, Perez (2001) establishes a clear and reverse relationship between the standard working hours and labour supply. These results have been obtained within a setting characterised by certainty and the lack of costs associated with the loss of leisure time. as a consequence of job search. Here. following the same approach (the canonical model of choice between consumption and leisure), and taking into consideration uncertainty due to the existence of unemployment. with job search costs and the existence of unemployment benefit. new results have been obtained.