Part‐Time Work, Fixed‐Term Contracts, and the Returns to Experience

Date01 August 2015
Published date01 August 2015
DOIhttp://doi.org/10.1111/obes.12073
512
©2014 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 77, 4 (2015) 0305–9049
doi: 10.1111/obes.12073
Part-TimeWork, Fixed-Term Contracts, and the
Returns to Experience*
Daniel Fern ´
andez-Kranz, Marie Paul‡ and N´
uria
Rodr´
iguez-Planas§,¶
IE Business School, Lotharstr. 65, Duisburg, NRW 47057, Germany
(e-mail: marie.paul@uni-due.de)
ee Waller, University of Duisburg-Essen, Ruhr Graduate School in Economics,
Hohenzollernstr. 1-3, Essen, NRW 45128, Germany (e-mail: marie.paul@uni-due.de)
§Queens College – CUNY 300A Powdermaker Hall, 65-30 Kissena Blvd, Queens, NY
11367, USA (e-mail: nrodriguezplanas@gmail.com)
IZA Schaumburg-Lippe-Str, 5-9, Bonn 53113, Germany (e-mail: rodriguez-planas@iza.org)
Abstract
Using data from Spanish Social Security records, we investigate the returns to experi-
ence for female workers in different flexible work arrangements. Our model consists of
four random-effects equations simultaneously estimated using MarkovChain Monte Carlo
techniques. We find a large negative wage effect of working part-time (PT), which differs
by motherhood status and contract type. We also find that working PT involves lower
returns to experience than standard full-time employment and thus a substantial negative
wage effect accumulates over time for those employed PT. Finally, our simulations reveal
that working PT also raises the probability of working under a fixed-term contract.
I. Introduction
Flexible work arrangements involving part-time (PT) work or fixed-term contracts have
become increasingly popular in many European countries. Although the incidence of tem-
porary employment or PT work can be as low as 5% in some countries (as is the case for
temporary employment in Norway and the United Kingdom, or PT work in Portugal), both
types of work arrangements are extremely widespread in other countries. Forinstance, one
in every four workers in Spain worksunder a temporar y contract, and close to one in every
three workers in the Netherlands works PT (shown in Table 1). In contrast with temporary
employment, which is evenly distributed across sexes, PT work is mostly a woman’s job,
with the share of women in PT employment ranging between 65% in Greece to 90% in the
Netherlands. In the light of the increasing relative importance of women’s contribution to
*We thank twoanonymous referees and the editor. We are also very grateful to the participants of the workshop
‘Increasing Labor Market Flexibility: Boon or Bane?’at the Institute for Employment Research, Nuremberg. Daniel
Fern ´andez-Kranz acknowledges financial support from the Spanish Ministry of Science and Innovation (grant No.
ECO2012–33081). N´uria Rodr´
iguez-Planas acknowledges financial support from the Spanish Ministry of Science
and Innovation (grant No. ECO2012–38460) and the Generalitat de Catalunya (grant No. SGR 2009-57).
JEL Classification numbers: J16, J24, J31, J41, C11, C33
Returns to experience in flexible work arrangements 513
TABLE 1
Incidence of temporary and part-time employment, OECD 2011 (in %)
Incidence of % of women
temporary Incidence of among those
employment PT work working PT
All Women All Women
Belgium 6.9 8.1 18.4 32 84.6
Denmark 6.9 8.1 10.4 15.1 71.5
France 11.4 12.4 12.5 20.8 82.7
Germany 10 10.6 21.6 38.8 86.1
Greece 11 11.9 10 14.6 65
Italy 11.7 13.4 17.2 32.3 83.6
The Netherlands 13.3 14.1 30.9 56.9 89.5
Norway 6.1 7.9 13 21.5 80.2
Portugal 20.3 20.5 4.5 7.5 76.1
Spain 24.5 25.6 12.4 21.2 80.9
The UK 4.7 5.2 19.6 34.3 85.9
Source: OECD Stats Extracts, 2013.
family earnings, understanding how these work arrangements affect women’s earnings re-
flects the first step towards designing policies that aim to improve the conditions of female
workers. This paper focuses on PT employment among women in Spain, given that the in-
cidence of PT among this group has recently soared from 15.5% in 2000 to 21.2% in 2011.
In contrast, the incidence of temporary employment has decreased from 29.4% to 25.6%.
Many studies haveexplored how flexible work arrangements affect wagesby comparing
the hourly wages of: (i) PT workers to those of their full-time (FT) counterparts; or (ii)
workers with a fixed-term contract to those with a permanent contract.1However, most
of these studies do not account for the timing, duration and sequence of workers’ flexible
work arrangements. Furthermore, most studies either analyse the effects of PT or temporary
employmenton wages but not the joint effect of both types of arrangement. The contribution
of this paper is to account for the worker’s work history and experience in flexible work
arrangements in such a comprehensive way. To achieve this, our study uses a large and high
quality data set from the 2006 Spanish social security records with accurate work history
information, allowing us to avoid manyproblems encountered in earlier work using survey
data. Given that PT workhas become increasingly popular in Spain over the last decade and
is mainly a woman’s job (as few as 2.4% of males worked in PT jobs in Spain in 2006 vs.
19.8% of women – OECD Stats Extracts, 2011, http://stats.oecd.org/), this paper focuses
on these two forms of flexible work arrangements among women in Spain.
In addition to controlling for the detailed work history of the worker in a flexible way,
our model is the first to estimate the wage effect of working PT or under a fixed-term
1See Blank (1998); Aaronson and French (2004); Hirsch (2005); Manning and Petrongolo (2008); Booth and
Wood (2008); and Fern´andez-Kranz and Rodr´
iguez-Planas (2011), among others, for papers analysing the PT/FT
hourly wage differential.And Jimeno and Toharia (1993); Segal and Sullivan(1998); Blanchard and Landier (2002);
Booth, Francesconi and Frank (2002); Dolado, Garc´
i and Jimeno (2002), Lane et al. (2003); De la Rica (2004); and
Amuedo-Dorantes and Serrano-Padial (2007), for papers analysing the hourly wage differential betweenfixed-term
and permanent contract workers.
©2014 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd

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