Underemployment and Wage Growth During COVID-19

This study provides new insights into the labour market outcomes of underemployed individuals, particularly the full-time underemployed who are often not included in official statistics. Using a difference-in-differences approach, we describe the impact of the COVID-19 pandemic on earnings progression for underemployed individuals in New Zealand relative to their fully-utilised counterparts. We find that both the employment and earnings-growth gap between the underemployed and fully-utilised decreased during the pandemic years. These results highlight the importance of considering the impact of economic shocks on different labour market groups and that while existing literature highlights that more vulnerable groups are less resilient to economic shocks, in line with previous New Zealand research, our results suggest that the COVID-19 pandemic was different.