Underemployment in a Computable General Equilibrium Model

This paper presents a methodology to account, in a computable general equilibrium model, for the presence of underemployment in an economic system. The methodology is based on the estimation of a matrix, mapping different categories of workers to levels of educational attainment. A procedure is proposed, w hich allows recalculating the matrix after the realization of a simulation with a CGE m odel, when employment levels are varied. In this way, a new matrix is made consistent with the simulation results, identifying a new equilibrium in the labor market, which entails a different combination of unemployment and underemployment.