Part-time hours and wages

This paper examines the factors contributing to wage discrepancies between part-time and full-time employment. We first theoretically explore the relationship between hours and wages within the presence of a wage bargaining model involving the union and the firm. The model incorporates workers’ coordination costs and reduced bargaining power for part-time positions. These elements are linked to the hours gap between part- and full-time workers within the firm, also referred to as the full-time equivalent. Using harmonized data from the 2018 Structure of Earnings Survey for 10 European countries, we document a strong relationship between full-time equivalent status and the part-time wage penalty. This relationship is observed consistently across demographic groups defined by gender, education, age, occupation, and firm size. Finally, we show that controlling for the full-time equivalent substantially reduces the unexplained component of the part-time wage gap.