The Part-time Premium Enigma: An Assessment of the Chilean Case

Chile has one of the lowest female labor force participation rates among Latin American countries. To promote female participation, part-time jobs are being encouraged (they are seen as a way to balance paid work, care and chores activities). Simple correlations between part-time work and hourly earnings are positive, suggesting the existence of a part-time premium. However, using the Klein & Vella (2009, 2010) technique on Chilean data, we show that after controlling for sample selection and endogeneity in the part-time work decision, such premium does not exist. Furthermore, depending on the sub-group of females considered, significant earnings penalties appear. Those in formal jobs are penalized, while the others are not. The pattern among dependent workers and independent workers is similar, the first are penalized while the others not. This paper has important policy implications: the promotion of part-time jobs has adverse consequences in terms of gender equality and labor market incentives: beyond lack of perspectives, low probability of receiving training, high job turnover, low probability of accessing to public social welfare benefits and low future pensions, women are penalized when they work part-time in formal employment.