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The Welfare Effects of Involuntary Part-Time Work

Daniel Borowczyk-Martins () and Etienne Lalé ()

No 2016-05, Sciences Po Economics Discussion Papers from Sciences Po Departement of Economics

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.

Keywords: Involuntary part-time work; Unemployment; Welfare (search for similar items in EconPapers)
JEL-codes: E21 E32 J21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-ltv
Date: 2016-06
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Related works:
Journal Article: The welfare effects of involuntary part-time work (2018) Downloads
Working Paper: The Welfare Effects of Involuntary Part-time Work (2016) Downloads
Working Paper: The Welfare Effects of Involuntary Part-Time Work (2016) Downloads
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