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The Extent and Consequences of Underemployment in Australia

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  • Roger Wilkins

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

Underemployment is generally conceived as excess labour supply associated with employed persons – that is, as a situation where employed persons would like to work more hours at prevailing wage rates. Using information collected by the 2001 Household, Income and Labour Dynamics in Australia (HILDA) survey, this study seeks to investigate the extent of underemployment and its effects on outcomes such as income, welfare dependence and subjective well-being. It is found that over one in six employed persons is underemployed, corresponding to a failure to utilise 5 per cent of hours supplied by employed persons. Underemployment is more frequently associated with part-time employment for females, but for males is more frequently associated with full-time employment. Models estimated of the effects of underemployment on outcomes imply that, while unemployment clearly has greater adverse consequences, underemployment is nonetheless associated with significant detrimental effects on the outcomes examined. Negative effects are found for both part-time employed and full-time employed workers who would prefer to work more hours, but effects are greater for underemployed part-time workers, and are particularly large for part-time workers who would like to work full-time. Indeed, for part-time workers seeking full-time employment, effects attributable to underemployment are, for some outcomes, not far short of those attributable to unemployment.

Suggested Citation

  • Roger Wilkins, 2004. "The Extent and Consequences of Underemployment in Australia," Melbourne Institute Working Paper Series wp2004n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2004n16
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2004n16.pdf
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    References listed on IDEAS

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    1. John C. Ham, 1982. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 335-354.
    2. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-192, February.
    3. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348.
    4. J. A. Jacobs, "undated". "Trends in wages, underemployment, and mobility among part-time workers," Institute for Research on Poverty Discussion Papers 1021-93, University of Wisconsin Institute for Research on Poverty.
    5. Kahn, Shulamit & Lang, Kevin, 1991. "The Effect of Hours Constraints on Labor Supply Estimates," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 605-611, November.
    6. Sarah Brown & John G. Sessions & Duncan Watson, "undated". "The Relative Contributions of Wage and Hours Constraints to Working Poverty in Britain," Discussion Papers in Public Sector Economics 01/4, Department of Economics, University of Leicester.
    7. S. Antonio Ruiz-Quintanilla & Rita Claes, 1996. "Determinants of Underemployment of Young Adults: A Multi-Country Study," ILR Review, Cornell University, ILR School, vol. 49(3), pages 424-438, April.
    8. Stewart, Mark B & Swaffield, Joanna K, 1997. "Constraints on the Desired Hours of Work of British Men," Economic Journal, Royal Economic Society, vol. 107(441), pages 520-535, March.
    9. Denniss, R, 2003. "Flexible measures for a flexible labour market," Australian Bulletin of Labour, National Institute of Labour Studies, vol. 29(2), pages 113-125.
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    Cited by:

    1. Robert Breunig & Xiaodong Gong & Gordon Leslie, 2015. "The Dynamics of Satisfaction with Working Hours in Australia: The Usefulness of Panel Data in Evaluating the Case for Policy Intervention," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(1), pages 130-154, January.
    2. Murat Arik & David A. Penn, 2010. "Available Labor Force in Southern Middle Tennessee: An Underemployment Study," Studies 201001, Middle Tennessee State University, Business and Economic Research Center.
    3. T. Kifle & P. Kler & S. Shankar, 2017. "Underemployment and its impact on job satisfaction: An Australian study on part-time employment," Discussion Papers in Economics economics:201712, Griffith University, Department of Accounting, Finance and Economics.

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