Wishing for More: Technological Change, the Rise of Involuntary Part-Time Employment and the Role of Active Labour Market Policies

Abstract

AbstractTechnological change has squeezed the demand for middle-skill jobs, which typically involve routine-intense tasks. This squeeze has coincided with an increase in the number of part-time working individuals who wish to work more hours. We argue that these two trends are linked. Due to the decline of middle-skill employment, medium-educated workers shift into low-skill employment, increasing the supply of labour for jobs in this segment of the labour market. This pushes those dependent on these jobs to accept part-time jobs, even if these involve fewer hours than they prefer. To empirically assess this claim, we analyse involuntary part-time employment across 16 European countries between 1999 and 2010. Our analysis confirms that a decline in middle-skill employment is associated with an increase in involuntary part-time employment at the bottom end of the labour market. This finding implies that the automation of routine-intense labour worsens employment possibilities in this segment of the labour market. However, we show that training and job creation schemes mitigate this effect. These programmes cushion competition either by providing medium-educated workers with the necessary skills to shift into high-skill jobs or by increasing employment possibilities. Thus, governments have the tools to support workers facing challenges in the knowledge economy.