Daniela Wegner Supervisor: Denise Doiron The impact of underemployment and over-employment on an individual’s health Daniela Wegner Supervisor: Denise Doiron Name, title, supervisor Definition of underemployment: individuals working less hours than they desire given their current job, overemployment A motivation for looking at underemployment and overemployment specifically, has been the widening distribution in working hours of the Australian labour market and the rapid increase in the proportion of workers declaring very long hours.

Related Literature Studies on underemployment and over-employment: Tseng & Wooden (2005), Doiron (2003), Kahn & Lang (1995) Research into unemployment & impact on health: Dockery (2004), Stewart (2001) Previous studies that have focused on underemployment and overemployment have not delved into the impact of deviations from preferred working hours on health. Tseng and Wooden have studied the disparity at the household level. Specifically, the work hours constraints faced by couples. They used the HILDA survey which I will discuss shortly, this paper builds on the existence of a ‘time divide, where many individuals are working many more hours than they would prefer and many working less, their results support this and is also evident in couples. Other studies have looked at the causes of under and over employment such as Doiron (2003) Previous studies have shown that unemployment is associated with deteriorating mental and physical health. On average unemployed individuals show lower levels of well-being compared with employed individuals. for example, effects have been found on……. Unemployment is but one of possible constraints on hours of work iver and under are other form of constraints. While studies have looked at overemployment and underemployment the causes, presence and the modelling of it, impact on health of this deviation has not been addressed based on my research to date.

Data HILDA: Household, Income & Labour Dynamics in Australia A nationally representative household panel survey Wave 1-4: 2001- 2004 Household, income, labour dynamics in Australia, the data allows this topic to be feasible: Has questions on employment status: actual hours worked vs. desired work hours, self completion questionaire on physical and mental health + other relevant exogenous variables The survey for the other categories involved interviews with all household members over the age of 15 and all those that were interviewed in wave 1 formed the basis of the panel that was conducted in subsequent periods. There are 4 waves of data that will be used from 2001 to 2004, the longitudinal nature providing observations for the same individual at different durations and thus accounting for individual characteristics over time.

Modeling Approach Theoretical model: dynamic optimization max U = a  health + b  income Empirical model: Ordered probits Issue of endogeneity The theoretical model is the utility maximisation for an individual and is a function of labour supply and health capital. The cncept of health capital is discussed in Grossman (1972). The applied model would entail running two ordered probits, one with labour supply as the endogenous variable with the exogenous variables including wage, education, experience and the other ordered probit has health as the endogenous variable with health-related variables as exogenous variables.

Output from model What’s the probability of being in poor health given that a person is overemployed/underemploed? What’s the cost of being overemployed/underemployed in terms of health status? Are those who are underemployed and overemployed affected equally? How significant an issue is this in Australia?

Policy Implication Why do we care? - will have consequences on the healthcare system - will shape labour supply outcomes Greater protection for workers; those on salaries Based on the prior expectation that deviations from desired work hours is detrimental to a person’s health, the government may implement a policy where workers on salaries are offered greater protection from long work hours. Also greater enforcement of hours worked, where individuals after reaching a certain amount, receive paid leave. This would induce employers to monitor their employees work hours and hopefully lower those who are overemployed.

Extensions Just in case if you have some time left you may prepare some extra materials Based on the prior expectation that deviations from desired work hours is detrimental to a person’s health, the government may implement a policy where workers on salaries are offered greater protection from long work hours. Also greater enforcement of hours worked, where individuals after reaching a certain amount, receive paid leave. This would induce employers to monitor their employees work hours and hopefully lower those who are overemployed.