How to Measure Underemployment?
AbstractUnemployment rates in the United States have been slow to fall over the last couple of years despite a modest growth in the number of people employed. The increase in nonfarm payrolls has averaged 191,000 a month over the last year, but the number of unemployed has fallen only by about 81,000 a month. In addition, average weekly hours of all employees have risen (to 34.5 in June 2013 from 33.8 in June 2009). What explains rising hours and rising employment but slowly falling unemployment? Bell and Blanchflower suggest that one factor is the extent to which workers already employed prefer to work more hours to fill the increasing needs of their employers. As a result, as demand grows, employers may first offer more hours to existing workers before hiring new people. The authors have captured this "excess capacity" in the UK labor market using UK data. Their "underemployment index" reveals that the potential for existing workers to take advantage of the recovery by increasing hours rather than creating new jobs, at the expense of the unemployed, is significant. Similar data do not exist in the United States, however, but the authors recommend that the Bureau of Labor Statistics produce the data needed to construct an equivalent US index.
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Bibliographic InfoPaper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP13-7.
Date of creation: Aug 2013
Date of revision:
underemployment; unemployment; excess capacity; labor market;
Find related papers by JEL classification:
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blanchflower, David G. & Oswald, Andrew J., 2001.
"Well-Being Over Time in Britain and the USA,"
The Warwick Economics Research Paper Series (TWERPS)
616, University of Warwick, Department of Economics.
- Bell, David N.F. & Blanchflower, David G., 2011.
"Young People and the Great Recession,"
IZA Discussion Papers
5674, Institute for the Study of Labor (IZA).
- David N. F. Bell & David G. Blanchflower, 2014. "Labor Market Slack in the United Kingdom," Working Paper Series WP14-2, Peterson Institute for International Economics.
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