Should Part-Time Jobs be Subsidised?
This article shows that in the context of a matching model with two imperfectly substitutable sectors, the coexistence of jobs characterised by different working hours can be explained by the capital intensities specific to each sector. Firms alone finance the capital used in the production process, so that a hold-up problem appears in wage negotiations. When the job-seeking of (ex ante homogeneous) workers is random, this phenomenon generates involuntary part-time work. Furthermore, the proportion of part-time jobs and the socially efficient total number of jobs are incompatible at the laissez-faire equilibrium. Consequently, heavier taxes (or lower subsidies) on part-time jobs relative to full-time jobs improve economic efficiency and might thereby stimulate participation in the labour market.
Volume (Year): (2010)
Issue (Month): 99-100 ()
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