The Part-Time Pay Penalty in a Segmented Labor Market

46 Pages Posted: 18 Aug 2009

See all articles by Daniel Fernández-Kranz

Daniel Fernández-Kranz

IE Business School

Núria Rodríguez-Planas

City University New York (CUNY), Queens College; IZA Institute of Labor Economics


While much of the literature that investigates the part-time (PT) / full-time (FT) hourly wage differential and its causes focuses on average effects, very few studies analyze the heterogeneous effects of PT work across different subgroups, despite the policy relevance of understanding channels behind the (raw) PT penalty in different labor markets. 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 fixed-term. Using a 21-year unbalanced Social Security records panel 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, and how to address them. It concludes with policy implications relevant for Continental Europe and its dual structure of employment protection.

Keywords: fixed-term and permanent contract, hourly wage levels and growth, prime-aged women, fixed-effects estimator, differential measurement error of HS variable, underlying channels

JEL Classification: J13, J16, J21, J22, J31, J62, C23

Suggested Citation

Fernandez-Kranz, Daniel and Rodriguez-Planas, Nuria, The Part-Time Pay Penalty in a Segmented Labor Market. IZA Discussion Paper No. 4342, Available at SSRN:

Daniel Fernandez-Kranz

IE Business School ( email )

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Nuria Rodriguez-Planas (Contact Author)

City University New York (CUNY), Queens College ( email )

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