Study of Underemployment

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Labour Economics



1. Introduction
2. Definition of Underemployment
3. Conceptual framework
4. Underemployment
5. Underemployment-features and reasons
6. Underemployment equilibrium

1. Problem statement and Objectives
2. Methodology
3. Analysis
4. Observations

1. Conclusion
2. Detection of invisible underemployment
3. Solutions
4. Measure to combat underemployment

Section I

1. Introduction
Most economists instinctively dismiss the term underemployment when they first encounter it. The conventional wisdom is that someone is working, seeking work, or voluntarily out of the labor force. If they do not like their job or the number of hours worked per week, they will pursue opportunities until they find a better fit. However, a bit of reflection suggests that the concept of underemployment is quite relevant and important. While people have wide and continuous preferences for hours worked per day or week, most jobs available still require thirty-five to forty hours per week spread over five days. Thus, given this fixed hours constraint, most people are either underemployed or over employed.

Consider the so-called trailing spouse where one spouse finds a very satisfying job in a place where there is no market for the special skills of their partner. Others find that they would have to relocate or commute long distances to attain a job that matched their training and abilities, but they value certain lifestyle patterns .In both of these examples, the person’s underemployment is voluntary. They could relocate and receive a wage commensurate with their human capital. Nevertheless, so long as they choose to live in a labor market that is too thin or sparse to provide them appropriate employment opportunity, they are underemployed and the local labor market has excess capacity.

2.Definition of Underemployment

Current international standards on the measurement of employment and unemployment, adopted by the Thirteenth International Conference of Labour Statisticians (ICLS) in 1982, are recognized worldwide. Most national measures of employment and unemployment tend to converge towards these standards, allowing reasonable international comparisons of national estimates. However, estimates of employment and unemployment do not fully describe the labour market performance in the various countries and need to be complemented with other measures, reflecting different aspects of the labour market situation. Such measures are most urgently needed in developing countries, where the lack of unemployment relief programmes constrains workers who find themselves without work to engage in marginal economic activities. They are also needed in industrialized countries where persons in employment also experience inadequate employment opportunities.

According to the National Sample Survey, “Underemployment is commonly defined as the under-utilisation of labour time of the workers. For instance, some of the persons categorized as usually employed, do not have work throught the year due to seasonability in work of otherwise and their labour time is not fully utilized – they are, therefore, underemployed”.

3,Conceptual framework:-

Employed person can be divided into three categories:-

1. Fully employed

2. Who are not fully employed, consist of

I. Part time worker/employees who want more hours.

II. Full time workers/employees who work part time due to insufficient work being available.

3.Employed workers who usually work part time and want more work can be segregated into two categories:-

I. Those who want to full time work.

II. Those who want to work more part time.

Person who usually work full time but work part time due to insufficient work being available or being stood down.

It has been observed that especially in the developing...
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