Business Cycle, Great Recession and Part-time Jobs

초록

During the Great Recession, the U.S. economy witnessed a substantial rise in parttime employment for sustained periods. We extend the New Keynesian-unemployment model by Gal´ı et al. (2012) to allow substitution between full-time and part-time labor and estimate the model’s parameters using the Bayesian method. In our model, households and firms can optimally allocate full-time and part-time labor. Moreover, disturbances exist in part-time labor supply (household disutility in part-time labor) and part-time labor demand (firms’ efficiency to utilize part-time labor). Although several shocks were found to cause the transition to part-time jobs during the recession, the most important factor was the part-time labor supply shock that increases part-time participation. The transition from full-time to part-time jobs, caused by part-time labor market shocks, mitigated the contraction in output during the recession. Part-time labor supply shock also explains a significant portion of slow recovery in gross wage during the recession, as the shock lowers part-time wage as well as the proportion of full-time workers in total employment.

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