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Overemployment, Underemployment and the opportunity cost of time

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  • Thomas Barré

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Focusing on individual labor market positions, this article proposes a new approach to elicit and measure constraints faced by rural households. Under market imperfections, individuals fail to equalize their hourly income to their shadow wage and become over- or underemployed. We estimate and explain this gap in a stochastic frontier framework for rural Vietnam. Both employees and farmers are found to fail in equalizing their hourly income to their shadow wage. Constraints faced by farmers are found to be stronger than that of employees: farmers' marginal revenue of labor is 3 times higher than their shadow wage while market wages earned by employees are 1.5 times higher than their shadow wages. Price risk is found to be the most important constraint faced by Vietnamese rural farmers while employees would benefit from the development of the road network.

Suggested Citation

  • Thomas Barré, 2010. "Overemployment, Underemployment and the opportunity cost of time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00452809, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00452809
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00452809
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    References listed on IDEAS

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    1. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    2. de Janvry, Alain & Fafchamps, M. & Sadoulet, Elisabeth, 1991. "Peasant Household Behavior with Missing Markets: Some Paradoxes Explain," CUDARE Working Papers 198579, University of California, Berkeley, Department of Agricultural and Resource Economics.
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