The part-time wage gap in Germany and the Netherlands

Abstract

Do part-time workers earn lower hourly wage rates than full-timers? Economic theory provides some reasons to expect the productivity of a part-time worker to be lower than the productivity of a full-time worker, other things being equal. For instance, the usual start-up effects at the beginning of the working day or the additional effort which is necessary to coordinate the work of more employees reduces the productivity of part-timers compared to full-time employees with the same individual characteristics. But in real life, some of the relevant characteristics are not equal. It is well known that part-time workers are on average less skilled, do different types of jobs and that employers tend to offer less training to employees with reduced working hours (Evans et al., 2001). A look at the median hourly earnings in 1995 indicates that in most countries, part-time workers indeed earn lower wages than full-timers (OECD, 1999). In the Netherlands, median hourly earnings of part-time workers represent about 93 percent of those of full-timers, whereas this ratio is only 87 percent in Germany. There also exists a limited amount of evidence that hourly earnings of part-timers working less than 20 hours per week are even lower than those of other part-timers. Partly, these wage gaps can be explained by the various individual and job-specific characteristics mentioned above. But what can be said about these wage gaps if differences in human capital and other relevant characteristics are taken into account? Previous results suggest that at least in Germany these wage differentials can partly be explained by individual and job-related characteristics, but there still remains a significant wage cut for part-timers after controlling for these characteristics (Kaukewitsch and Rouault, 1998; Bardasi and Gornick, 2000). The object of this chapter is to compare the quality — in terms of wage rates — of part-time jobs in Germany and the Netherlands.