Part-time Wage Penalties across the Working Hours Distribution


We investigate heterogeneity of wages and wage growth rates across different working hours to quantify the implications of splitting work equally among spouses. Based on a combination of German administrative and survey data, we account for endogenous selection into specific hours by exploiting reforms of the tax system. We find substantial heterogeneity in part-time wage penalties, ranging from -2% to -18% compared to full-time. The heterogeneity in wage growth penalties is similar, but less severe. Both penalties are not linearly decreasing in working hours. High penalties for working high part-time hours suggest that splitting work equally would imply sizeable wage losses.