Alternative Employment Arrangements as a Response to Job Loss

I examine the extent to which workers who lose jobs find work in alternative employment arrangements such as temporary work, part-time work, and independent contracting rather than as conventional full-time regular employees. The analysis is based on data from two sources. First, I use matched data from the Displaced Worker Supplement (DWS) to the February 1994 Current Population Survey (CPS) and the Contingent and Alternative Employment Arrangements Supplement (CAEAS) to the February 1995 DWS. Second, I use data from the seven DWS's conducted between 1984 and 1996. The results are clear. Using the matched DWS-CAEAS, I find that job losers are significantly more likely than non-losers to be in temporary jobs (including on-call work and contract work). There is also some evidence from the matched data that the likelihood of temporary employment falls with time since job loss while the likelihood of regular employment increases with time since job loss. Using the combined DWS data. where unfortunately I cannot identify workers in temporary jobs, I find that job losers are less likely than non-losers to be either in regular jobs or self-employed subsequent to job loss. But job losers are more likely than non-losers to be employed part-time subsequent to job loss. The time-series pattern in the DWS data shows that the part-time alternative to regular employment for job losers was less important in the tight labor market of the late 1980's than in the looser labor markets of the early 1980's and early 1990's. There is also evidence that the likelihood of part-time employment falls with time since job loss while the likelihood of regular employment increases with time since job loss. Thus, it appears that temporary and part-time jobs are taken by workers subsequent to job loss, but these alternative employment arrangements are often part of a transitional process leading to regular full-time permanent employment.