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ISER Working Paper Series 2000-11

Women and part-time employment: workers' 'choices' and wage penalties in five industrialized countries

Authors

Publication date

01 Mar 2000

Summary

In this paper, we use cross-nationally comparable data from the Luxembourg Income Study (LIS) to analyse the patterns and consequences of part-time employment among women across five industrialized countries - Canada, Germany, Italy, the United Kingdom, and the United States - as of the middle 1990s. First, we investigate women's employment choices, specifically the three-option decision between non-employment, part-time employment, and full-time employment. Second, we analyse the direct economic consequences for women workers of engagement in part-time rather than full-time employment.
Our empirical analysis is structured around two questions. As we assess our findings with respect to these questions, our primary interest is always in identifying cross-national similarities as well as variability:
(1) Which factors - individual and household - affect the employment decisions of adult women, that is, their decisions with respect to non-employment versus parttime employment versus full-time employment? Which factors seem to have a uniform effect on women's choices across these countries, and which appear to vary cross-nationally?
(2) How do the hourly earnings of part-time workers differ from those of full-time workers, both with and without worker- and job-related controls? Again, to what extent do we find uniform - versus varying - patterns of pay differentials across countries?
Our results indicate marked variation across these countries, but reveal a number of uniformities as well.
First, with respect to women's employment choices, we find significant and varying effects of many of the independent variables. The results especially reveal the influence of dependent care. Our results reveal that, as expected, child-related factors - both the presence and age of children - are crucial to women's employment outcomes in nearly all cases. In all countries, being a mother (compared to being childless), ceteris paribus, decreases the probability that a woman selects full-time work, and increases the probabilities of both non-working and of working part-time. Among mothers, the effects of having young children vary across countries, with the largest effects - decreases in fulltime work, increases in non-work - seen in Germany and in the UK, and smaller effects seen in Canada and the US. Part-time work, as a substitute for full-time work, typically becomes a more common option as women's young children leave infancy and enter their preschool, then their school-age, years.
The cross-national pattern is consistent with our expectations; the effects of young children are smaller, overall, where part-time work is less widely available and (in the case of Italy) where the state provides more preschool slots. It is interesting that the effects of young children are mitigated, to some extent, by the presence of non-earning elderly household members, especially in the English-speaking countries where out-of-home child care options are fewer.
We also found strong and consistent effects of the presence of a non-wage-earning adult in the home on working-age women's labour market attachment. These adults may be unemployed or out of the labour market for a variety of reasons; many 'adult dependents', especially those who are elderly, will be in need of care. As expected, the presence of 'adult dependents' - spouses and non-spouses - exerts substantial downward pressure on women's probability of working full-time, and in several cases on the probability of working part-time as well.
Second, we turned our attention to the direct economic consequences for women workers of engaging in part-time rather than full-time employment - that is, to the question of wage penalties associated with part-time employment. We find unadjusted penalties (i.e., with no controls for measurable worker- and job-related characteristics) everywhere, ranging from 8-12% in Canada and Germany, to 15% in the UK, to as high as 22% in the US and Italy, meaning that part-time workers earn that much less than full-time workers in each of these countries. Although controlling for measurable worker- and job-related characteristics fails to fully explain the gap in any country, our controls reduce the observed gap in all countries; the reduction due to measured characteristics ranges from 9% in Germany to over 90% in the UK. After controlling for measurable characteristics, the largest wage gaps are still found in the US (17%) and in Italy (14%). Wage gaps - adjusted and unadjusted - may be larger in these countries (the US and Italy) due in part to their smaller part-time labour markets (where part-time work is more marginalized); the very low level of regulation in the US may also drive the gap upwards.
While the unadjusted wage differential in the UK is mainly due to differences in observable characteristics, in three countries - Canada, the US and Italy - the wage gap is mostly due to the 'selection effect'. This means that women are selected into the two labour forces in a way that increases the gap between their earnings, although we are not able to explain what is different about the two groups of workers. Finally, in Germany the wage gap is mostly due to differences in returns to characteristics (combined with the differences in the constants). In this sense, only in Germany is there is evidence of pay 'discrimination' directed at part-time workers, relative to their full-time counterparts.

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