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The Part-time Premium Enigma:An Assessment of the Chilean Case
Andrea Bentancor? and Virginia Robano§
? ComunidadMujer and Universidad Adolfo Ibanez§ Institute for International Economic Policy, George Washington University
GDN 14th Annual Global Development ConferenceJune 19-21, 2013
Manila, Philippines
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 1 / 15
Outline
1 Contribution 1: document that in Latin America there is a positivecorrelation between part-time and hourly earnings
2 Contribution 2: Analysis of the case of Chile; part-time penalty
3 Contribution 3: Possible explanations for the sign reversal
4 Conclusions and Policy Implications
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 2 / 15
What do we do in this paper? Contribution 1
Part-time work is being promoted in order to increase female laborforce participation rates.
The evidence for Chile (Rau 2010) and Honduras (Lopez Boo et al.2010) shows a positive relationship between hourly earnings andpart-time work.
We show that the positive correlation between part-time job statusand hourly earnings is present in several Latin American countries.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 3 / 15
Contribution 1: The Part-time Premium in Latin America
OLS estimations with robust s.e.
HH surveys circa 2005, sample offemales in the [15-64] age bracket.
In developed countries, the hourly ratein part-time is smaller than in full-time(OECD).
FemalesArgentina 0.16
(0.02)***Bolivia 0.55
(0.08)***Brazil 0.25
(0.01)***Costa Rica 0.35
(0.03)***Chile 0.34
(0.01)***Honduras 0.43
(0.02)***Mexico 0.31
(0.02)***Paraguay 0.28
(0.03)***Peru 0.50
(0.08)***Uruguay 0.22
(0.01)***Venezuela, RB 0.12
(0.03)***
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 4 / 15
Descriptive Statistics, Female Working Population
� Rau (2010, 2012) callspart-time work‘precarious’� Descriptive Statisticsconfirm that females inpart-time are (comparedto those in full-time):
Poorer
Less educated
More likely to havechildren aged 5-14in the house
Part-time Full-time Difference
Hours worked 19.11 47.09 -27.98***(0.14)
Monthly earnings in $ 172436.11 276880.34 -104444.23***in USD 211.00 341.00 (4411.63)
Hourly earnings 2879.00 1432.71 1446.29***approx. in USD 3.50 1.76 (41.96)
Ln of hourly earnings 7.42 7.02 0.40***(0.01)
Urban 0.77 0.74 0.03***(0.01)
Poor 0.13 0.05 0.08***(0.00)
Years of schooling 10.32 11.21 -0.89***(0.05)
Age 38.88 37.86 1.02***(0.16)
Married/with partner 0.52 0.49 0.03***(0.01)
Number of children 5-14 0.73 0.65 0.07***(0.01)
Number of children 0-4 0.30 0.29 0.01(0.01)
Number of observations 5826 21338
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 5 / 15
What do we do in this paper? Contribution 2
We identify and unbiasedly estimate the causal effect of working part-timeon hourly earnings for Chilean females.
Had we available random data, we would use OLS.
Though the standard answer in the literature is to use instrumentalvariables, there is no strong, credible instrument (to our knowledge)capable of distinguishing between the decision of working part-timeand the decision of participating in the labor market.
� Using an estimation strategy that does not rely on the existence of aninstrument(s) for identification, we find that there is a negative causaleffect from working part-time on hourly earnings of about 20 percent forsome groups of workers.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 6 / 15
The Model
Consider the triangular model:
wi = α + βPTi + X ′i ϕ+ εi (1)
PTi = 1{X ′i κ+ νi > 0} (2)
where wi denote earnings; PTi is the probability of working part-time; Xi isa vector of human capital characteristics and 1{·} is the indicator function.
� Our objective is to identify and unbiasedly estimate β. intuition
Mroz (1999) noted that even if errors were homoskedastic, becausethe probability model is non linear, it would still be possible toidentify the model, but using data only from the tails.
Rigobon (2003) and Klein and Vella (2009, KV) noted that if theerrors in equation (2) are heteroskedastic, this fact induces anexclusion restriction and it is thus possible to identify the model.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 7 / 15
The Model
Assume that the error term in equation (2) is heteroskedastic of thefollowing form: νi = S(X ′π)ν∗i , where ν∗i is a zero-meanhomoskedastic error.
The probability of working part-time can be written as:
E[PT|X ] = Pr( X ′i κ
S(X ′π)
)(3)
derivation
thus the predicted probability of treatment becomes a validinstrument.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 8 / 15
Sources of Heteroskedasticity in the part-time equation:
Education
Age (experience)
Regional variables
Demographic characteristics
Measurement Error
Selectivity issues
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 9 / 15
Results from OLS and IV regressions - Part-time coefficient
OLS IV KV-IV KV-IV KV-IV(1) (2) (3) (4) (5)
All females 15-59 0.42 0.62 -0.04 -0.07 -0.08(0.01)*** (0.35)** (0.12) (0.16) (0.16)
in percentages 52% 86% -4% -7% -8%
Dependent workers 0.32 0.84 -0.36 -0.25 -0.48(0.01)*** (0.56)* (0.12)*** (0.14)** (0.16)***
in percentages 38% 132% -30% -22% -38%
Formal status 0.39 -0.74 -0.17 n/a -0.40(0.02)*** (0.90) (0.18) n/a (0.20)**
in percentages 48% -52% -16% n/a -33%
column 3: KV-IV with same explanatory variables than column 1, no selcorrection
column 4: KV-IV with same than column 3 plus informal status on the wageequation
column 5: KV-IV with column 4 plus selection correction on the wageequation
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 10 / 15
Results from OLS and IV regressions, including experiencein present job - Part-time coefficient
OLS IV KV-IV KV-IV KV-IV(1) (2) (3) (4) (5)
All females 15-59 0.43 1.46 -0.14 -0.26 -0.32(0.01)*** (0.44)*** (0.12) (0.17)* (0.18)**
In percentages 54% 331% -13% -23% -27%
Dependent workers 0.33 3.41 -0.56 -0.45 -0.40(0.01)*** (1.27)*** (0.14)*** (0.18)** (0.18)**
In percentages 39% 2927% -43% -36% -33%
Formal status 0.40 3.79 -0.38 n/a -0.36(0.02)*** (1.73)** (0.18)** (0.18)**
In percentages 49% 4326% -32% -30%
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 11 / 15
Contribution 3: Possible explanations for the sign reversal
� Possible explanations:
precariousness conditions
interaction with informality
demand side factors
measurement errors
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 12 / 15
Conclusions
Contribution 1: Similar to other studies in developing countries, we showthe existence of a positive association between part-time jobsand hourly earnings.
Contribution 2: When we address the presence of unobserved factors andidentify the effect of part-time on hourly earnings, theobserved positive correlation becomes a penalty.
Contribution 3: We conjecture that the reasons behind the sign reversal.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 13 / 15
Policy Implications
Part-time work might increase female labor force participation,but it has adverse consequences in terms of gender equality:
Women are side-tracked
We show that formal/salaried workers are penalized
If part-time is involuntary (full-time jobs do not exist for them),then public policy has to assure that:
females do not face neither monetary penalties
nor low probability of accessing public social welfare benefits
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 14 / 15
THANK YOU!
www.comunidadmujer.cl/estudios www.virginiarobano.com
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 15 / 15