The part-time wage penalty: Does bargaining coverage outweigh regional differences in Spain

Abstract

The use of part-time jobs is steadily increasing in most advanced economies. Previous literature has concluded that part-time workers suffer a wage penalty, but its magnitude varies across studies and countries. The part-time penalty is the otherwise unexplained element of the gap between full-time and part-time hourly earnings. One potential factor accounting for international differences in this penalty is the coverage of collective bargaining. This article outlines research examining wage differences between parttime and full-time male and female workers in Spain, a country with a very high level of coverage of collective agreements but very heterogeneous regional labour markets. Results are obtained using an econometric decomposition specifically adapted to matched employer-employee data. They show that intra-firm wage differentials for part- and fulltime workers with the same characteristics are negligible. But results that are perhaps less expected are those based on the regional analysis - an unprecedented perspective compared with the previous literature. These results show that despite very significant differences in economies and labour markets, observed wage gaps between part-time and full-time workers in each Spanish region are also mainly explained by different endowments of individual, job and firm characteristics. Overall, our evidence highlights the over-riding role of wage setting mechanisms, specifically collective bargaining coverage, in minimising inter-regional differences in the wage penalty of part-time workers.