The part-time premium enigma: An assessment of the Chilean case

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This presentation is about a paper the causal effect of working part-time on hourly earnings. The paper discusses implications in countries where part-time work is considered as a way to increase female labor force participation, while it could also mean a monetary penalty for women.
Presentation by Andrea Bentancor, Comunidad mujer
GDN 14th Annual Conference
Manila, Philippines
June 19-21, 2013

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The part-time premium enigma: An assessment of the Chilean case

  1. 1. The Part-time Premium Enigma:An Assessment of the Chilean CaseAndrea Bentancor and Virginia Robano§ComunidadMujer and Universidad Adolfo Ib´a˜nez§ Institute for International Economic Policy, George Washington UniversityGDN 14th Annual Global Development ConferenceJune 19-21, 2013Manila, PhilippinesBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 1 / 15
  2. 2. Outline1 Contribution 1: document that in Latin America there is a positivecorrelation between part-time and hourly earnings2 Contribution 2: Analysis of the case of Chile; part-time penalty3 Contribution 3: Possible explanations for the sign reversal4 Conclusions and Policy ImplicationsBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 2 / 15
  3. 3. What do we do in this paper? Contribution 1Part-time work is being promoted in order to increase female laborforce participation rates.The evidence for Chile (Rau 2010) and Honduras (L´opez B´oo 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
  4. 4. Contribution 1: The Part-time Premium in Latin AmericaOLS 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
  5. 5. Descriptive Statistics, Female Working PopulationRau (2010, 2012) callspart-time work‘precarious’Descriptive Statisticsconfirm that females inpart-time are (comparedto those in full-time):PoorerLess educatedMore likely to havechildren aged 5-14in the housePart-time Full-time DifferenceHours 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 21338Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 5 / 15
  6. 6. What do we do in this paper? Contribution 2We 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
  7. 7. The ModelConsider the triangular model:wi = α + βPTi + Xi ϕ + εi (1)PTi = 1{Xi 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. intuitionMroz (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
  8. 8. The ModelAssume 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] = PrXi κS( ˜X π)(3)derivationthus the predicted probability of treatment becomes a validinstrument.Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 8 / 15
  9. 9. Sources of Heteroskedasticity in the part-time equation:EducationAge (experience)Regional variablesDemographic characteristicsMeasurement ErrorSelectivity issuesBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 9 / 15
  10. 10. Results from OLS and IV regressions - Part-time coefficientOLS 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 selcorrectioncolumn 4: KV-IV with same than column 3 plus informal status on the wageequationcolumn 5: KV-IV with column 4 plus selection correction on the wageequationBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 10 / 15
  11. 11. Results from OLS and IV regressions, including experiencein present job - Part-time coefficientOLS 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
  12. 12. Contribution 3: Possible explanations for the sign reversalPossible explanations:precariousness conditionsinteraction with informalitydemand side factorsmeasurement errorsBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 12 / 15
  13. 13. ConclusionsContribution 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
  14. 14. Policy ImplicationsPart-time work might increase female labor force participation,but it has adverse consequences in terms of gender equality:Women are side-trackedWe show that formal/salaried workers are penalizedIf 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 penaltiesnor low probability of accessing public social welfare benefitsBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 14 / 15
  15. 15. THANK YOU!www.comunidadmujer.cl/estudios www.virginiarobano.comBentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 15 / 15

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