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

1. The Part-time Premium Enigma:
An Assessment of the Chilean Case
Andrea Bentancor and Virginia Robano§
ComunidadMujer and Universidad Adolfo Ib´a˜nez
§ Institute for International Economic Policy, George Washington University
GDN 14th Annual Global Development Conference
June 19-21, 2013
Manila, Philippines
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 1 / 15

2. Outline
1 Contribution 1: document that in Latin America there is a positive
correlation 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

3. What do we do in this paper? Contribution 1
Part-time work is being promoted in order to increase female labor
force participation rates.
The evidence for Chile (Rau 2010) and Honduras (L´opez B´oo et al.
2010) shows a positive relationship between hourly earnings and
part-time work.
We show that the positive correlation between part-time job status
and hourly earnings is present in several Latin American countries.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 3 / 15

4. Contribution 1: The Part-time Premium in Latin America
OLS estimations with robust s.e.
HH surveys circa 2005, sample of
females in the [15-64] age bracket.
In developed countries, the hourly rate
in part-time is smaller than in full-time
(OECD).
Females
Argentina 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. Descriptive Statistics, Female Working Population
Rau (2010, 2012) calls
part-time work
‘precarious’
Descriptive Statistics
confirm that females in
part-time are (compared
to those in full-time):
Poorer
Less educated
More likely to have
children aged 5-14
in 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

6. What do we do in this paper? Contribution 2
We identify and unbiasedly estimate the causal effect of working part-time
on hourly earnings for Chilean females.
Had we available random data, we would use OLS.
Though the standard answer in the literature is to use instrumental
variables, there is no strong, credible instrument (to our knowledge)
capable of distinguishing between the decision of working part-time
and the decision of participating in the labor market.
Using an estimation strategy that does not rely on the existence of an
instrument(s) for identification, we find that there is a negative causal
effect from working part-time on hourly earnings of about 20 percent for
some groups of workers.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 6 / 15

7. The Model
Consider 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 is
a 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, because
the probability model is non linear, it would still be possible to
identify the model, but using data only from the tails.
Rigobon (2003) and Klein and Vella (2009, KV) noted that if the
errors in equation (2) are heteroskedastic, this fact induces an
exclusion restriction and it is thus possible to identify the model.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 7 / 15

8. The Model
Assume that the error term in equation (2) is heteroskedastic of the
following form: νi = S( ˜X π)ν∗
i , where ν∗
i is a zero-mean
homoskedastic error.
The probability of working part-time can be written as:
E[PT|X] = Pr
Xi κ
S( ˜X π)
(3)
derivation
thus the predicted probability of treatment becomes a valid
instrument.
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 8 / 15

9. 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

10. 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 sel
correction
column 4: KV-IV with same than column 3 plus informal status on the wage
equation
column 5: KV-IV with column 4 plus selection correction on the wage
equation
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 10 / 15

11. Results from OLS and IV regressions, including experience
in 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

12. 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

13. Conclusions
Contribution 1: Similar to other studies in developing countries, we show
the existence of a positive association between part-time jobs
and hourly earnings.
Contribution 2: When we address the presence of unobserved factors and
identify the effect of part-time on hourly earnings, the
observed 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. 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

15. THANK YOU!
www.comunidadmujer.cl/estudios www.virginiarobano.com
Bentancor and Robano (CM, UAI, IIEP) Part-time work GDN 2013 15 / 15