Is There a Causal Effect of Working Part-Time on Current and Future Wages?

Abstract

In this paper, I study the causal effects of part-time work on current and future wages. To estimate these effects, I use a random effects model with a wage equation capturing the employment history and a dynamic multinomial probit component for the choice of employment status. Exclusion restrictions from the institutional context are exploited to support identification. The results suggest that working part-time with few hours has a large causal effect on current wages, but more extensive part-time work does not reduce current wages. However, both types of part-time work lead to negative long-term wage effects.