Part-Time Work, Fixed-Term Contracts, and the Returns to Experience

Abstract

Using data from Spanish Social Security records, we investigate the returns to experience in different flexible work arrangements, including part-time and full-time work, and permanent and fixed-term contracts. We use a trivariate random effects model which consists of a three-equation system that is estimated simultaneously by Markov Chain Monte Carlo techniques. Our results indicate that there is a large pay gap for working part-time which persists many years after having resumed full-time work. We also find that working part-time involves lower returns to experience than standard full-time employment and thus a substantial negative wage differential for those employed part-time accumulates over time. Finally, we find that heterogeneity exist by contract type and motherhood status.

Keywords: returns to experience of differential work histories, random effects models, fixed-term and permanent contracts, MCMC, part-time employment, motherhood

JEL Classification: J16, J24, J31, J41, C11, C33