Skip to content!

October 26, 2022

Cluster-Seminar Public Finances and Living Conditions

Promotion prospects and within-level wage growth: A decomposition of the part-time penalty


October 26, 2022


Ferdinand Friedensburg Room
DIW Berlin
Room 2.3.001
Mohrenstraße 58
10117 Berlin


Boryana Ilieva
The part-time wage penalty is a key contributor to the gender wage gap. In this paper, I study how the part-time penalty decomposes in a lack of promotions to higher paying levels of the career ladder and a lack of wage growth conditional on the career level. I develop a dynamic model of labor supply that distinctly features hierarchical wage structures and promotions. I estimate the decomposition for high educated females in Germany based on a new classification of occupations available in the German Socio Economic Panel. Findings suggest that part-time employment results in both within-career-level wage penalties, as well as in promotion penalties. Within level penalties are larger on the high career level. Yet, if working hours are reduced for multiple years in a row, the part-time penalty in promotions dominates. Finally, a set of counterfactual simulations demonstrates that incentivizing full-time employment early in the life cycle stimulates promotions and results in substantial life-time earnings gains.