Flexibility Versus Hiring Costs: The Demand for Part-time Labor

For the last decade, part-time studies have mainly focused on supply side effects. We focus in this paper on the demand side effects. On the one hand, to be more flexible, firms hire part-time workers so that production is always as close as possible to the demand. On the other hand, to decrease their hiring costs, firms prefer to hire full-time workers. We introduce these part-time work characteristics within an on-the-job equilibrium search model framework. The firm's wage choices are the result of a trade-off between its production level (which depend on his size), its wage costs and the costs of hiring part- and full-time employees. Workers receive two kinds of labor contracts: one corresponding to full-time jobs, and the other one to part-time jobs. Utility as a function of wages and the number of weekly worked hours is the criteria workers consider when accepting or rejecting job offers. In this paper, we prove the existence of a Nash equilibrium, in which all firms hire both part- and full-time workers. We can thus compare different equilibria related with different full-time work week. The share of part-time workers depends on which of two economic effects is dominant: relative wage costs in one case, and production reorganization effects in the other case.