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.