Would you Value a few More Hours of work? Underemployment and Subjective Well-Being Across Chilean Workers

Gabriel Rodríguez-Puello (), Ariel Arcos and Benjamin Jara
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Gabriel Rodríguez-Puello: Universidad Tecnológica de Bolívar
Ariel Arcos: Universidad Católica del Norte
Benjamin Jara: Gran Sasso Science Institute
Authors registered in the RePEc Author Service: Gabriel Rodríguez-Puello

Applied Research in Quality of Life, 2022, vol. 17, issue 2, No 21, 885-912

Abstract: Abstract Underemployment has gained attention in recent years because of its effects on health and well-being (life satisfaction), it is a widespread phenomenon in the labor force that affects not only workers, but also households, companies and governments. This paper explores the relationship between underemployment and subjective well-being for a representative sample of Chilean workers using an ordered probit model. Also, by using different underemployment definitions and a latent class ordered probit model we analyze the observed and unobserved heterogeneity in this relationship. Finally, we assess the monetary valuation of well-being costs by estimating the amount of money that a worker is willing to accept in order to bear the potential negative effects of underemployment on well-being. Our results find a negative relationship between underemployment and subjective well-being, as the average worker is willing to accept an increase of CLP$64,009 (roughly 30.5% of the minimum wage) in her/his monthly wage for being underemployed. If we take into account the observed and unobserved heterogeneity, our results identify a group that is not sensitive to underemployment, while others are willing to accept an increase of CLP$146,622 in her/his monthly wage for being underemployed. Our work highlights the importance of well-being in the workplace and has implications for labor flexibility legislation and the empowerment of workers. Heterogeneous responses to underemployment imply that one-size-fits-all policies to regulate working hours might not suffice.

Keywords: Underemployment; Subjective well-being; Unobserved heterogeneity; Willingness to accept (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11482-021-09941-7

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