Extensive versus intensive margin in Germany and the United States: any differences?

Abstract

This article analyses the role of the extensive vis-à-vis the intensive margin of labour adjustment in Germany and in the United States. The contribution is twofold. First, we provide an update of older US studies and confirm the view that the extensive margin (i.e. the adjustment in the number of workers) explains the largest part in the overall variability in aggregate hours. Second, although the German labour market structure is very different from its US counterpart, the quantitative importance of the extensive margin is of similar magnitude.