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The Welfare Effects of Involuntary Part-Time Work

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  • Daniel Borowczyk-Martins

    (Département d'économie)

  • Etienne Lalé

    (Bristol University)

Abstract

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.

Suggested Citation

  • Daniel Borowczyk-Martins & Etienne Lalé, 2016. "The Welfare Effects of Involuntary Part-Time Work," Sciences Po Economics Discussion Papers 2016-05, Sciences Po Departement of Economics.
  • Handle: RePEc:spo:wpecon:info:hdl:2441/4f4eu80n0h8r28g6dadlk02mtb
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    1. The Welfare Effects of Involuntary Part-Time Work
      by Christian Zimmermann in NEP-DGE blog on 2016-07-09 01:46:17

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    Cited by:

    1. David N. F. Bell & David G. Blanchflower, 2021. "Underemployment in the United States and Europe," ILR Review, Cornell University, ILR School, vol. 74(1), pages 56-94, January.

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    More about this item

    Keywords

    Involuntary part-time work; Unemployment; Welfare;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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