Australian National University

Firm Specific Human Capital or Matching? Underemployment in the AWIRS

Email address: doiron@coombs.anu.edu.au

Abstract:
Various household surveys in Europe and North America have shown similar patterns relating the incidence of underemployment to characteristics of the workers. The underemployed are younger, have less education, less job tenure, lower wages and lower actual hours of work. Few models of firm behaviour and firm-worker contracts can explain these patterns. In this paper, Australian data which match firms and workers are used to provide new evidence on the role of underemployment and to discriminate between competing models. This is the first study of underemployment to use firm specific information and it is also the first study of underemployment involving Australian data. The results show that 1) the patterns found in Europe and North America are also present in the Australian data 2) underemployment is more prevalent in firms whose demand is expanding thus the common interpretation of underemployment as a result of labour hoarding is not correct in general 3) results involving tenure and firm's output demand suggest that a matching model is better at explaining underemployment compared with the competing model based on firm specific human capital.

PDF file of paper: Not available.

Session: Labor Economics

Time: Sunday, 8 July, 8am - 9:30am

Room: D