The impact of part-time work on firm productivity: evidence from Italy

Abstract

In this article, we explore the impact of part-time work on firm productivity. Using a large panel data set of Italian corporations for the period 2000–2010, we first estimate firms’ yearly productivity by removing the output contribution of the labor and capital inputs aggregates. We use different approaches aimed at solving input simultaneity, including a version of Ackerberg et al.’s (2015), control function approach, that also accounts for firm fixed effects. We then match the productivity estimates with rich information on the firms’ use of part-time work obtained from survey data for the years 2005, 2007, and 2010 and estimate the impact of part-time work on productivity. We find that a 10% increase in the share of part-timers reduces productivity by 1.45%. The results suggest that this harmful effect stems from horizontal rather than vertical part-time arrangements. We also find that firms declaring to use part-time work to accommodate workers’ requests suffer the most. Moreover, we show that the so-called “flexible” and “elastic” clauses are successful in cushioning the negative impact associated with part-time work.