How Bad is Involuntary Part-Time Work?
55 Pages Posted: 15 Aug 2015 Last revised: 25 Feb 2016
Date Written: January 1, 2016
We use a set of empirical and analytical tools to conduct parallel analyses of involuntary part-time work and unemployment in the U.S. labor market. In the empirical analysis, we document that the similar cyclical behavior of involuntary part-time work and unemployment masks major differences in the underlying dynamics. Unlike unemployment, variations in involuntary part-time work are mostly explained by its interaction with full-time employment, and since the Great Recession employed workers are at a greater risk of working part-time involuntarily than being unemployed. In the theoretical analysis, we show that the higher probability of regaining full-time employment is key to distinguish involuntary part-time work from unemployment from a worker's perspective. We also quantify the welfare costs of cyclical fluctuations in involuntary part-time work, and the amplification of these costs arising from the elevated levels of involuntary part-time work observed since the Great Recession.
Keywords: Employment, Involuntary part-time work, Welfare, Great Recession
JEL Classification: E21, E32, J21
Suggested Citation: Suggested Citation