The Dynamics of Part-Time Work

Abstract

This paper uses 14 years of data from the PSID to explore dynamic labor supply choices among adult women between full-time, part-time, or no labor market work. A variety of models indicate that past choices should be important in predicting current labor supply choices. This paper compares the effectiveness of several estimation strategies which require more or less historical information. The results indicate that past history in labor supply choices among adult women is very important in predicting current labor supply; given the lack of such data in many cases, the paper explores how much is lost when limited or no longitudinal information is available. In addition, the paper explores the substantive question of the role of part-time work in the labor market. Part-time workers are a very heterogeneous group; different part-time workers are in the midst of very different labor supply patterns. Most women use part-time work as a temporary alternative to full-time work or to being out of the labor market; few women use it as a transitional step into full-time employment. Simulations suggest the potential impact on future labor supply of mandating that low-skilled women who are out of the labor market enter part-time work.