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Incidence and Duration of Unemployment Spells: Implications on the Wage Differentials of Part‐Time and Full‐Time Workers
Author(s) -
BaffoeBonnie John
Publication year - 2003
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/byg007
Subject(s) - unemployment , economics , duration (music) , wage , labour economics , sample (material) , differential (mechanical device) , full time , demographic economics , economic growth , engineering , art , chemistry , literature , chromatography , aerospace engineering
This article analyzes the extent to which incidence of unemployment and duration of unemployment spells affect the wage differentials between full‐time and part‐time workers. The estimation results of a sample selectivity bias–adjusted wage equation reveal that high incidences of unemployment are associated with low wages for both full‐time and part‐time workers. However, the reduction in wages due to incidence of unemployment is larger for full‐time workers in high‐paid jobs than for their part‐time counterparts. Duration of unemployment spells affects full‐time and part‐time workers differently. In general, longer unemployment spells tend to increase the wages of full‐time workers but tend to depress the wages of part‐time workers. Although the probability of unemployment is not a factor in explaining the wage differential, the duration of unemployment accounts for a substantial portion (about 66.6% in full sample) of the wage differential that exists between full‐time and part‐time workers.