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Overemployment, Underemployment and the opportunity cost of time


  • Thomas Barré

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)


Focusing on individual labor market positions, this article proposes a new approach to elicit and measure constraints faced by rural households. Under market imperfections, individuals fail to equalize their hourly income to their shadow wage and become over- or underemployed. We estimate and explain this gap in a stochastic frontier framework for rural Vietnam. Both employees and farmers are found to fail in equalizing their hourly income to their shadow wage. Constraints faced by farmers are found to be stronger than that of employees: farmers' marginal revenue of labor is 3 times higher than their shadow wage while market wages earned by employees are 1.5 times higher than their shadow wages. Price risk is found to be the most important constraint faced by Vietnamese rural farmers while employees would benefit from the development of the road network.

Suggested Citation

  • Thomas Barré, 2010. "Overemployment, Underemployment and the opportunity cost of time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00452809, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00452809
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    Market imperfections; Shadow wages; Allocative efficiency; Vietnam;

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