PTE is Not Persistent

The average monthly transition probabilities between employment states in the CPS show the lack of persistence in P T E relative to other employment states. in Ta­ble 1.2, I show the average of the seasonally adjusted monthly transition probabilities of workers between states of full-time employed, at work part-time for non-economic reasons, at work part-time for economic reasons, unemployment, and nonparticipation for the sample period 1994-2014.

Dis-aggregating employment into full-time and part-time categories highlights some key differences in the flow probabilities for employed workers. Within-employment transitions are large, especially for P T E workers. The transition probability of full­time workers to part-time for economic reasons (FT PTE) is larger than the flow of full-time workers to unemployment (FT U). As seen in Table 1.2 or Figure 1.2, while about 1% of full-time workers become unemployed in a given month, 1.5% of workers transition to part-time for economic reasons. Although these transition probabilities seem small, the number of workers who move to both PTE and U from full-time work is large due to the size of the full-time employed population. More full-time workers move to PTE than to U.

Part-time for economic reasons is a very transitory state: only 36% of workers at work part-time for economic reasons remain in PTE the following month. By contrast, about half of unemployed workers remain unemployed in a given month. The flow of workers back to full-time employment is also much higher for the part­time employed than it is for the unemployed. While only 12% of unemployed workers move to a full-time job each month, nearly one-third of workers classified as PTE return to full-time employment. While part of the transitory nature of PTE is due to the high probability of returning to full-time work, workers in PTE also have a high probability of moving to PTN and nonemployment. 6.4% of workers in PTE become unemployed on average each month, a rate that is 7 times higher than for full-time workers.