A model of working time under utility competition in the labor market

The text develops a model of wage and working-time setting by profit-maximizing firms in a competitive labor market with homogeneous workers. Emphasis is placed on the role played by fixed costs of labor and of workers' varying effectiveness in time. Competition among firms implies a constraint on the utility level associated to the labor contract. The model contributes to explain insiders' rationing and other contemporary stylized facts, and lends itself to a particular approach to the problem of evaluating the consequences of mandatory working-time reductions.