Conclusion of Ongoing Work with US Census Bureau Data

In this paper, I document that fluctuations in part-time employment for eco­nomic reasons arise from within-job changes in hours due to slack work or business conditions. Motivated by this finding, I build a model to explain the cyclical move­ments in part-time employment based on firm-level changes in labor demand. I show that the model is capable of matching the patterns of worker transitions for part­time employment found in CPS data. Particularly, part-time employment utilization is transitory and characterized by high transitions to and from full-time employment. Firms also use part-time with layoffs, producing a high probability of separating to unemployment for part-time workers. Part-time utilization in the cross-sectional distribution of firms is dependent on firm characteristics such as age, size, and pro­ductivity. Over the business cycle, part-time employment and unemployment are countercyclical and display similar volatilities. Relative to the case with no part-time margin, the model can account for a significant increase in business cycle volatility in unemployment and vacancies.

The dashed blue line plots the monthly transition probability of full-time workers to unem­ployment. The solid red line plots the monthly transition probability of full-time workers to part-time for economic reasons. The flow probabilities are constructed from CPS micro data from 1994-2014. Gray bars indicate NBER recession dates.

The blue line plots the quarterly averaged monthly probability of moving from full-time to part-time for economic reasons while remaining with the same employer. The red line plots the probability of the same transition while also experiencing a job transition.

The blue line plots the quarterly averaged monthly probability of moving from part-time for economic reasons to full-time while remaining with the same employer. The green line plots the probability of the same transition while also experiencing a job transition.The quarterly averaged proportion of each transition probability out of F T which was accompanied with a job transition, defined as a change in the primary employer reported the previous month or a change in the number of jobs held if the respondent was a multiple job holder in either month.The quarterly averaged proportion of each transition probability out of P T E which was accompanied with a job transition, defined as a change in the primary employer reported the previous month or a change in the number of jobs held if the respondent was a multiple job holder in either month.The red line plots the firm’s size L. The blue line plots the number of workers employed part-time, aL. Increases in firm size result from hiring, while sharp declines in size indicate layoffs. Smooth declines in firm size result from firm inaction and exogenous separations.

Layoffs, part-time, and weekly hours growth by monthly employment growth rate. The blue line is the layoff rate of firms, the red line indicates part-time utilization as a fraction of a firm’s workforce, and the green line indicates the growth rate of average weekly hours for firms by employment growth.