The Impact of Income Taxation on the Labor Supply of Part-time and Full-time Workers

This paper estimates the effect of income taxation on the labor supply of part-time and full-time workers in the United States. Using a model that incorporates the endogeneity of the net wage rate and the virtual income, and correcting for self-selection into part-time and full-time jobs, the results indicate that part-time workers are relatively more responsive to changes in income tax than full-time workers. Estimated wage elasticities are relatively larger for part-time than for full-time workers.The simulation results indicate that income tax has a disincentive effect on both part-time and full-time workers, with part-time and full-time workers reducing their labor supply by 0.87 and 0.58 hours, respectively, if a 5% tax is imposed. However, the percentage reduction in hours of work is very small, and a tax policy may have little effect on the labor supply of workers.The results seem to suggest that female and black part-time workers are more likely to drop out of the labor force at higher levels of income tax. It also tests the hypothesis that the labor supply behavior of parttime and full-time workers differs.The test results indicate that the determinants of the labor supply of part-time workers are different from those of full-time workers. It is noted that there is a significant difference between the labor supply of male part-time and female parttime workers, as well as between the black part-time and white part-time workers. In order to reduce voluntary unemployment in market activities among married females and blacks, the government can encourage part-time work by sponsoring legislation or instituting a scheme that will allow part-time workers to pay relatively less in payroll taxes.     

Incidence and Duration of Unemployment Spells: Implications on the Wage Differentials of Part-Time and Full-Time Workers

This article analyzes the extent to which incidence of unemployment and duration of unemployment spells affect the wage differentials between full-time and part-time workers. The estimation results of a sample selectivity bias–adjusted wage equation reveal that high incidences of unemployment are associated with low wages for both full-time and part-time workers. However, the reduction in wages due to incidence of unemployment is larger for full-time workers in high-paid jobs than for their part-time counterparts. Duration of unemployment spells affects full-time and part-time workers differently. In general, longer unemployment spells tend to increase the wages of full-time workers but tend to depress the wages of part-time workers. Although the probability of unemployment is not a factor in explaining the wage differential, the duration of unemployment accounts for a substantial portion (about 66.6% in full sample) of the wage differential that exists between full-time and part-time workers.     

Definition of full-time and part-time employment,and distributional assumptions: the implications for the estimated full-time and part-time wage equations

This paper demonstrates that rejecting the standard definition of full-time and part-time workers, the estimated number of hours that an individual is likely to work as a full-time worker is a function of the type of distribution one assumes about the error term in the wage equation. Adopting a switching regression model with unknown sample selection, we have found that the normality assumption generates higher hours for full-timers in comparison with the non-normal distributions. We also noted that regardless of the distribution assumed, the hours differ from one industry to another. The implication is that the standard definition of full-time and part-time worker may not be appropriate for all firms irrespective of the distribution assumed. The paper also shows the sensitivity of parameter estimates to the distributional assumptions about the error term in the wage equation. The results indicate that the normal distribution wage equation estimates are relatively larger than the Weibull and exponential distributions. This finding is particularly important because such differences in estimated coefficients may have a direct wage influence on the wage gap between full-time and part-time workers across distributions.     

Working part time: by choice or by constraint

The selection of workers into part-time jobs and the wages they earn are analysed using the 1989 Labour Market Activity Survey. We focus on the distinction between voluntary and involuntary part-time workers, since involuntary part-time workers earn substantially lower wages than other workers. We find that the selection of individuals into involuntary part-time work is more closely tied to job characteristics than personal or human capital characteristics. The lower wage earned by involuntary part-time workers is largely due to differences in returns and selection effects, rather than differences in endowments. JEL Classification: J22, J23, J31     

REASSESSING SEGMENTATION IN THE LABOUR MARKET: AN APPLICATION FOR ITALY 1995–2004

The aim of this paper is to test for the presence of dualism in a standard wage regression. The disparity in wages between primary and secondary workers, according to labour market segmentation theory, is not provided by worker characteristics, but rather by job characteristics. A standard way to assess this situation is by looking at the estimated coefficients in a standard regression for comparable workers across different labour market segments. In an attempt to avoid arbitrary modelling choices, we deploy mixture regression methods which allow for endogenous determination of the number of existing labour market segments. Using Italian data, our modelling strategy outlines stark differences in returns to human capital between homogeneous workers in different markets. Thus, future policies should consider these findings when implementing labour market measures.     

Female employment growth in Britain, 1979–92: some competing hypotheses ∗

Over the period 1979–92, the gender and status composition of employment has undergone significant change in Britain, which cannot be attributed merely to cyclical influences. In this paper changes in the pattern of employment by occupation, gender and part-time and full-time status are decomposed to cast some light on three hypotheses (buffer stock, substitution and segregation) which are designed to explain the growth of female employment in Britain over the period 1979–92. The results reveal that women have made some progress in achieving full-time employment positions, after correction for the influence of structural change and the declining full-time share of employment. It is noted, however, that following the labour market legislation of the 1980s full-time employment is not necessarily more secure than part-time. The long run substitution of part-time for full-time employment has benefited the employment of women, even though their share of part-time employment has declined. The analysis informs the debate on the flexible firm at least in respect of numerical flexibility.     

Segmented labour markets and the estimation of wage functions

This paper uses a stratified random sample of private sector employees to estimate wage equations for both the male labour market as a whole and six ‘segments’ of the labour market, segement which are defined with respect to the industry and size characteristics of the employing establishmen. Highly conventional results are obtained when wage equations are estimated for the male labour market as a whole, or within two segements, comprising almost half the survey population. However, one can reject conclusively the hypothesis that the same estimating equation is appropriate for modelling wage determination in all segments and if a ‘human capital’ (HK) model is, within segements, tested against more appropriate alternative hypotheses for wage determination using the Davidson and Mackinnon (1981) methodology for the testing of non-nested hypotheses, the conclusion is that one should reject the HK specification and not reject the alternative.

It is therefore argued that the disaggregation of labour market data reveals differences in the wage determination process that are not consistent with the view that labour markets are ‘dualistic’ but are consistent with the view that are segmented.     

Wage Differentials and Labour Supply of Married Women in Japan: Part-time and Informal Sector Work Opportunities

This paper studies the pattern of labour supply of Japanese married women. The study develops and tests a discrete work choice model with a differing level of fixed cost of work and equalizing wage differential s. This accounts for differences in work characteristics of the regular status and part-time status work at firms, the family and self-employment. A 20 to 30 per cent hourly wage differential was obser ved between work categories with control on skills, region and other variables. Different effects are studied of the numbe r and ages of children, a grandmother's presence and the wife's educational attainments on the category of work selected.
The data employed come from The Occupational History and Mobility Survey of Women 1983 (OHMS), conducted by the National Institute for Vocational and Occupational Research, and allow detailed wage regression and consideration of different work categories which were not feasible in previous works. Empirical regulari ties of the Japanese labour market, such as the absence of growth in labour participation for mothers with small children, are better explained when work categories are dealt with separately.     

The effect of increases in the level of unemployement on older workers

This study explores the influence of the level of unemployment on labour force participation and full- versus part-time status, for men and women aged 56 to 60. Comparisons are also made with 16–19- and 31–35-year-old men and women. It is found that when the unemployment increases, discourgement is greater for older men than for younger ones. For Women, Prime-aged workers exhibit less discouragement than either the older or younger women. The study also infers the original labour force status of older discouraged workers. For men, displaced workers come largely from the ranks of full-time workers. For women, both full- and part-time workers are displaced.     

Occupational sex segregation in the UK 1979–89: the role of part-time employment

In this article, the pattern of occupational segregation by sex in the UK between 1979 and 1989 is explored through the decomposition of the new Karmel Maclachlan index. Over the upturn, 1983–89, integration of the sexes, as measured by the Composition Effect occurred faster for full-time employment than total (full-time and part-time) employment. On the other hand, integration, in general, proceeded more slowly over the downturn of 1979–83 but total employment showed a more rapid rate of desegregation than full-time employment. Further analysis of the index, based on notional redistributions of part-time and full-time employment, confirms that part-time employment appears to be disproportionately responsible for the overall level of occupational sex segregation and to inhibit its decline over the upswing. These results are attributed to the different labour supply behaviour of males and females and the propensity of employers to treat part-time employees as a flexible reserve. Policies are outlined to counteract both the unequal treatment of part-time workers, particularly women, and the allocative inefficiency caused by the growth of part-time employment, relative to full-time employment.     

The Gender Wage Gap in Paid- and Self-Employment in Australia

This paper presents an analysis of the gender wage gap in the highly regulated Australian labour market. It compares wage outcomes in the wage and salary sector with those for the self-employed. Comparisons with the United States are provided. The large gender pay gap in self-employment suggests that the aggregate gender wage differential will not be eliminated solely through wage determination for wage and salary earners. The greater gender wage gap in the self-employed sector may reflect liquidity constraints that are more difficult for self-employed women to overcome relative to self-employed men. The comparisons with the United States suggest that women will experience deterioration in relative earnings as the Australian labour market is deregulated.     

Foreign ownership wage premia in emerging economies

In this article we examine the relationship between wages, labour productivity and ownership using a linked employer–employee dataset covering a large fraction of the Czech labour market in 2006. We distinguish between different origins of ownership and study wage and productivity differences. The raw wage differential between foreign and domestically‐owned firms is about 23 percent. The empirical analysis is carried out on both firm‐ and individual‐level data. A key finding is that industry, region and notably human capital explain only a small part of the foreign–domestic ownership wage differential. Both white and blue collar workers as well as skilled and unskilled employees obtain a foreign ownership wage premium. Foreign ownership premia are more prevalent in older and less technologically advanced firms. Joint estimation of productivity and wage equations show that, controlling for human capital, the difference in productivity is about twice as large as the wage differential. Overall, results indicate that the international firms share their rents with their employees.     

The rise of part-time employment in the great recession: Its causes and macroeconomic effects

During the Great Recession, the U.S. economy witnessed a substantial rise in part-time employment for a sustained period. We extend the New Keynesian unemployment model by Galí et al. (2012) to allow substitutions between full-time and part-time labor, and estimate the model’s parameters by using the Bayesian method. In our model, households and firms can optimally allocate full-time and part-time labor, and disturbances exist in part-time labor supply (household disutility from part-time labor) and part-time labor demand (firms’ efficiency to use part-time labor). As for the Great Recession, the initial increase in part-time employment at the outset of the financial crisis is mostly explained by the rise of the risk premia; the persistently high level of part-time employment in the later period is mainly explained by an exogenous increase in part-time labor supply. A part-time labor supply shock also explains a significant portion of slow recovery in the gross wage during the recession, as the shock lowers the part-time wage and the proportion of full-time workers in total employment. Notably, the results from our model suggest that though the transition from full-time to part-time jobs contributed to mitigating the sharp contraction in total employment and labor force during the Great Recession, it played only a limited role in relieving recessionary pressure.     

Labour market segmentation and union wage gaps

Abstract

There has been a great deal of research regard the effects of unions on union – non-union wage gap. Most of the studies regarding the impact of unions on wages have assumed that apart from the division between union and non-union workers, the labour market is relatively homogeneous. A number of economists, however, have argued that the labour market is segmented, implying that there are distinct labour markets and that some workers employment opportunities are concentrated in “bad jobs” while other workers employment opportunities are concentrated in “good jobs” which are rationed.

This paper will explore whether the relative wage differential between union and non-union workers differs between the independent primary, subordinate primary and secondary labour markets. Labour market segments are defined using “job zones”. “Job zones” are distinct groups defined by the level of specific vocational preparation necessary for a particular occupation, allowing for the comparison of skill levels and training for each occupation. The data on “job zones” comes from the Occupational Information Network database (O?Net). We estimate separate equations for union and non-union workers in each segment using data from the Current Population Survey and calculate union non-union differentials for each labour market segment. The findings of this paper suggest that the greatest differentials are in secondary labour markets followed by differentials in the subordinate primary labour market and that the smallest wage differentials are in the independent primary labour market.     

Skilled and unskilled wage dynamics in Italy in the 1990s: changes in individual characteristics,institutions, trade and technology

In this paper, we use individual micro data on workers combined with industry and regional data to study the wage dynamics of skilled and unskilled workers in Italy in the 1991–1998 period. In contrast to previous empirical studies, our data make it possible to analyse, within a single framework, the role of many of the factors indicated in the literature as possible determinants of skilled and unskilled wage dynamics: changes in the individual characteristics of workers, changes in labour market institutions, increasing international integration, and skill‐biased technological progress. Our results show that international integration, both in terms of trade in goods and in terms of international labour mobility, plays a role in determining the wage dynamics of skilled (white‐collar) and unskilled (blue‐collar) workers. Moreover, in line with labour economics research, our findings show that the individual characteristics of workers and the institutional variables are more relevant in explaining skilled and unskilled wage dynamics than wage differentials.     

Gender differences in self‐employment

This paper examines the factors that influence transitions into self‐employment, paying particular attention to gender differences. We find that: (i) men are more responsive to the wage differential between wage/salaried employment and self‐employment; (ii) liquidity constraints are more important for men; and (iii) the link between father's self‐employment status and the probability of self‐employment is stronger for men. Taken together, these results suggest that, for women, self‐employment is a closer substitute for part‐time work and labour‐market inactivity than it is for men. We attribute such differences to the different labour market opportunities and occupational strategies of women.     

Undereducation and Overeducation in the Australian Labour Market*

This paper uses data from the 1996 Census of Population and Housing Household Sample File (HSF) to study the incidence of mismatch between workers' educational attainments and the requirements of their jobs, and the earnings consequences of this mismatch. It also examines whether mismatch contributes to the explanation of the gender wage differential in the Australian labour market. It is found that approximately 15.8 per cent of men and 13.6 per cent of women are overeducated, whereas approximately 18.5 per cent of women and 13.7 per cent of men are undereducated. Substantial earnings consequences are found to be associated with this mismatch, with surplus schooling yielding relatively low returns. The results suggest that mismatch does not account for the gender wage gap in the Australian labour market; rather the gender wage differential is entrenched in the fundamentals of pay determination.     

The Contribution of Employment Separation to Teenage Unemployment*

In this paper we analyze the relationship between labour market flows and the unemployment rate of teenagers compared to males aged 25–54 years. For 1979–80 teenagers separated from employment at approximately five times the rate of adult males and this was the principal factor associated with their high rate of unemployment. Job-finding success from unemployment and from outside the labour force is approximately the same for each labour market group. A special feature is the analysis of gross flows between full-time and part-time employment. Labour market flows involving part-time employment account for little of the unemployment rate difference.     

Economic status of households and labour supply to market and non-market activities mdash; some results from a poor rural economy

Assuming a given underlying utility structure for all households, we have demonstrated that the differential labour supply behaviour among household categories results owing to the different sets of constraints they face depending on their economic status and asset ownership. Using the criteria implied by the theoretical model four household gorups are defined. The labour supply functions estimated for these four groups support the theoretical result of significantly different supply behaviour. The empirical exercise, as expected, indicates that the labour supply decision of the subsistence group is guided by their need to achieve the minimum level of consumption while the middle-income households, who do not have enough non-labour income to meet their minimum subsistence need, tend to work longer hours in market activities than the workers from high-income households. However, market labour supply by high-income households is found to be relatively more sensitive to changes in the wage rate. The behaviour of the household groups differ so significantly that if an aggregate model is estimated ignoring inter-household differences, the predicted hours will grossly over-estimate labour supply to market activities.     

Collective bargaining and regional wage differences in Spain: an empirical analysis

This article analyses the importance of labour market institutions and, in particular, collective wage bargaining in shaping regional wage differences in the Spanish labour market. Using microdata from the Spanish Structure of Earnings Survey, our results reveal that there are significant inter-regional wage differences for similarly skilled workers. These differences are present throughout the whole wage structure and can be explained by both competitive and non-competitive factors, such as insufficient competition in product markets. In this context, industry-level collective bargaining plays a major role in accounting for regional wage differences, a role that in the Spanish case is enhanced due to its unusual regional dimension.