Flows to and from Working Part Time for Economic Reasons and the Labor Market Aggregates During and after the 2007-09 Recession

FRB Richmond Economic Quarterly, vol. 100, no. 2, Second Quarter 2014, pp. 87-111

25 Pages Posted: 31 Jul 2015

See all articles by Maria E. Canon

Maria E. Canon

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Marianna Kudlyak

Federal Reserve Bank of San Francisco; Hoover Institution; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Guannan Luo

City University of Hong Kong (CityU) - Department of Economics & Finance; Northwestern University

Marisa Reed

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2014

Abstract

Using counterfactual exercises for the transition probabilities between full-time employment, part-time employment for economic reasons (PTER), part-time employment for noneconomic reasons (PTNER), unemployment, and out-of-the-labor-force similar to Shimer (2012), we find that, ceteris paribus, changes in the transition probabilities to and from PTER in the aftermath of the 2007-09 recession were mainly associated with changes in the composition of employment (full- versus part-time, and PTER versus PTNER) instead of with changes in the distribution of individuals between employment and non-employment. Consequently, policymakers' attention to PTER implies a broader definition of resource underutilization in the labor market than a simple extensive employment margin as captured by the standard unemployment rate. It brings attention to the intensive employment margin and the quality of employment. Since PTER workers' share is highest in non-routine manual (typically, low-wage) occupations and given recent works on job polarization, it is a challenging task to disentangle cyclical versus structural factors behind an increased number of PTER workers after the 2007-09 recession.

Suggested Citation

Canon, Maria E. and Kudlyak, Marianna and Luo, Guannan and Luo, Guannan and Reed, Marisa, Flows to and from Working Part Time for Economic Reasons and the Labor Market Aggregates During and after the 2007-09 Recession (2014). FRB Richmond Economic Quarterly, vol. 100, no. 2, Second Quarter 2014, pp. 87-111, Available at SSRN: https://ssrn.com/abstract=2637436

Maria E. Canon

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Marianna Kudlyak (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Hoover Institution ( email )

Stanford, CA 94305
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Guannan Luo

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Marisa Reed

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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