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Part and Full-Time Employment over the Business Cycle

Benjamin Griffy and Pedro Gomis-Porqueras

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a model that allows us to understand the cyclicality of part and full-time employment. In the model, labor market frictions generate a surplus between workers and firms, who jointly decide whether their employment relationship is best suited for part or full-time work based on match quality shocks and the broader economic environment. Lower acyclical costs cause the surplus of part-time matches to vary less with the business cycle than the surplus of full-time matches. As a consequence, the model is able to generate procyclical full-time employment and countercyclical part-time employment as observed in the data. We also show that ignoring part-time employment understates the impact on employment and inequality of a recession and that subsidizing part-time work is far more effective than increasing unemployment insurance at preventing a labor market downturn.

Keywords: part-time employment; search; matching; bargaining (search for similar items in EconPapers)
JEL-codes: E24 E30 J31 J6 (search for similar items in EconPapers)
Date: 2020-12-21
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-lab and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105095

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