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The Welfare Effects of Involuntary Part-Time Work

Listed author(s):
  • Daniel Borowczyk-Martins

    (Département d'économie)

  • Etienne Lalé

    (Department of Economics)

Employed individuals in the U.S. are increasingly more likely to work part-time involuntarily than to be unemployed. Spells of involuntary part-time work are different from unemployment spells: a full-time worker who takes on a part-time job suffers an earnings loss while remaining employed, and is unlikely to receive income compensation from publicly-provided insurance programs.We analyze these differences through the lens of an incomplete-market, job-search model featuring unemployment risk alongside an additional risk of involuntary part-time employment.A calibration of the model consistent with U.S. institutions and labor-market dynamics shows that involuntary part-time work generates lower welfare losses relative to unemployment. This finding relies critically on the much higher probability to return to full-time employment from part-time work. We interpret it as a premium in access to full-time work faced by involuntary part-time workers, and use our model to tabulate its value in consumption-equivalent units.

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File URL: http://spire.sciencespo.fr/hdl:/2441/4f4eu80n0h8r28g6dadlk02mtb/resources/2016-borowczyk-martins-lale-the-welfare-effects-of-involuntary-part-time-work.pdf
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Paper provided by Sciences Po Departement of Economics in its series Sciences Po Economics Discussion Papers with number 2016-05.

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Date of creation: Jun 2016
Handle: RePEc:spo:wpecon:info:hdl:2441/4f4eu80n0h8r28g6dadlk02mtb
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