The dynamic demand for part-time and full-time labour

This paper explores the hypothesis that part-time work plays a distinct role in the adjustment strategies of firms in the face of economic shocks. Dynamic labour demand equations for part-time and full-time labour estimated from monthly data from the US Current Population Survey indicate that part-time labour is adjusted more rapidly in a number of industries. Furthermore, the adjustment of the two types of labour is not independent: disequilibrium in one slows the rate of adjustment of the other. These results lend support to the notion that part-time labour provides an important source of dynamic flexibility in some industries. Policies that reduce the relative costs of adjusting part-time labour, and changes in the economic environment that make flexibility more important to firms, may explain some of the growth in part-time employment that has taken place over the last several decades.