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The Welfare Effects of Involuntary Part-Time Work

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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.
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Dates and versions

hal-03393194 , version 1 (21-10-2021)

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Attribution - NoDerivatives - CC BY 4.0

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Daniel Borowczyk-Martins, Etienne Lalé. The Welfare Effects of Involuntary Part-Time Work. 2016. ⟨hal-03393194⟩
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