The part-time pay penalty in a segmented labor market

Abstract

This paper is the first to examine the implications of switching to PT work for women's subsequent earnings trajectories, distinguishing by their type of contract: permanent or fixedterm. Using a rich longitudinal Spanish data set from Social Security records of over 76,000 prime-aged women strongly attached to the Spanish labor market, we find that PT work aggravates the segmentation of the labor market insofar there is a PT pay penalty and this penalty is larger and more persistent in the case of women with fixed-term contracts. The paper discusses problems arising in empirical estimation (including a problem not discussed in the literature up to now: the differential measurement error of the LHS variable by PT status), and how to address them. It concludes with policy implications relevant for Continental Europe and its dual structure of employment protection.

The part-time wage penalty: Does bargaining coverage outweigh regional differences in Spain?

“…When including also occupation as an explanatory variable (model 3), occupational segregation arises as a very relevant explanatory factor of the wage gaps between full-and part-time workers, very especially for females 5 (this factor alone explains 0.053 log points or 51% of the gap for males and 0.116 log points or 46% for females); although the rest of the results are overall rather similar, the unexplained components of the decomposition almost halves for both males (-0.016) and females (-0.024). These latter values are very different from the wage premium for part-time workers previously found for Spain by Cebrián et al (2000), Pissarides et al (2005), and Pagán (2007) using the ECHP, but are close to the results obtained by O'Dorchai et al (2007) with the 1995 SES for men (-0.06 log points), and lower than those obtained by Rodríguez-Planas (2011) andFernández-Kranz et al (2014) using the MCVL (between -0.06 and -0.13 log points) and a similar set of explanatory factors. It is worth mentioning that the estimated penalty according to model 3 (with similar controls to those included in the models summarised in figure 1) is very close to the one expected when regressing the wage penalty on the coverage of collective bargaining: around 4 percentage points.…”

“…However, despite adding multiple explanatory factors, an unexplained part of the wage differential usually persists, which is considered the wage penalty associated with working part-time. This wage penalty could be null for young people accessing their first job (Russo and Hassik, 2008), while there is abundant evidence that the differential increases with age and especially with years worked in part-time positions (Wolf, 2014) and that wage increases over time are also lower for part-time workers (Fernández-Kranz and Rodríguez-Planas, 2011). While abundant gender analyses agree that the wage penalty is usually greater for women than for men, studies making disaggregated estimations are scarce.…”

Women's Part-Time/Full-Time Wage Di fferentials in Europe: An Endogenous Switching Model

“…In addition, Fernández-Kranz and Rodríguez-Planas (2011) state that Spain has one of the lowest rate of women working part-time among advanced economies, and the pay penalty to part-time work is among the worst in European Union.…”

The labor market in Spain, 2002–2016

“…In the case of part-time employment, it seems it is becoming increasingly involuntary, as 61% of part-time workers declared they were in part-time employment only because they could not find a full-time job in 2016 (against 32% in 2007) [4].…”