Are PhD students allowed to extend their graduate studies to have a better chance at an academic job? How long is this allowed for even after the student has completed graduation requirements?
In the United States, there is a lot of opportunity for flexibility in scheduling graduation, assuming the faculty member has sufficient funding and motivation to keep the student around.  

In most cases, however, the student would likely be served better not by delaying their graduation but instead by arranging for a transitional period as a postdoc with their same advisor.  In many cases, the cost of a postdoc is often not terribly different than a graduate student (higher salary is offset by lack of tuition), and there is typically little difficulty converting grant money from one to the other.

As a postdoc, however, there is no longer a question of graduation and thesis hanging over the former student's head, and they can be more free to focus instead on publication, networking, giving talks, and other things that will help to better position them for applying for academic positions.