Working time flexibility and inequality

Info: 

Badania porównawcze ujawniają dwie uderzające własności nierówności na rynku pracy: nierówności występują praktycznie wszędzie i zmieniają się bardzo powoli. Takich samych wniosków dostarczają nawet te analizy, w których nierówności nie są prostą miarą zróżnicowania zarobków: jeśli ludzie różnią się poziomem wykształcenia, zawodami i miejscem zamieszkania, pewnego zróżnicowania zarobków należy się spodziewać. Lecz jeśli uwzględni się te różnice, a płace nadal pozostają nierówne, rodzi się potrzeba zrozumienia natury tego zjawiska, by móc zaproponować skuteczne metody jego ograniczania. Jedno z potencjalnych wyjaśnień zaproponowała Goldin (2014): na niektórych stanowiskach wymagana jest znaczna doza dyspozycyjności. Pracownicy, którzy z różnych względów nie są w stanie sprostać temu oczekiwaniu uzyskują niższe wynagrodzenie, niż pozostali. Ograniczeniami w dyspozycyjności może być m.in. pełnienie funkcji opiekuńczych, ale także edukacja (np. wśród młodych pracowników) czy ograniczona sprawność fizyczna (np. wśród starszych pracowników lub osób z niepełnosprawnościami). Czy nierówności na rynku pracy mogą wytłumaczyć rozbieżności pomiędzy wymogiem dyspozycyjności po stronie pracodawcy i zdolnością do bycia dyspozycyjnym po stronie pracownika?


Since the seminal contribution of Goldin (2014), the literature on labor market  began to focus on how different time endowments affects inequality, mostly in terms of wages. It is possible to distinguish two effects. First, the direct effects, which are related to the non-linear relation between wages and working hours. This relation arises both from higher rewards to working long hours, but also from rewards to working specific hours, i.e. during the night when it is possible to cooperate with overseas partners. An indirect effect of such pattern is that workers will sort into different jobs not only according to their productivity, but  also due to their expected time availability. Expecting greater time constraints some workers might sort into occupations that provide lower returns to working long hours, at the expense of lower wages. The provision of flexible work arrangements, then, appears as a way to kill two birds with one stone: it could reduce labor market inequality and at the same time promote a more efficient allocation of resources.

Budget: 

Źródło finansowania | Financing: Narodowe Centrum Nauki, DAINA, joint with ​Vilnius University

Projekt realizowany | Timeline: 08/2018 -- 08/2021

Kierownik | Principal Investigator: Marek Weretka

Budżet łączny | Total budget: 380 846 zł

  • wynagrodzenia dla podstawowych wykonawców | compensation to researchers: 252 000 zł
  • stypendia dla młodych badaczy | scholarships for young scholars: 72 000 zł
  • komputery i oprogramowanie | hardware and software: 13 700 zł
  • konferencje i inne wyjazdy | conference travels: 26 700 zł
  • materiały, dane i usługi obce | data, usables and outsourced services: 50 543 zł
  • koszty pośrednie dla FAME | overheads for FAME: 107 110 zł
Purpose: 

Goldin (2014, AER) argues that societies have made a remarkable progress in closing the wage and employment gaps in the last fifty years; yet, they have failed to achieve full labor market equality. Goldin boils down the remaining difference to the concept of time flexibility, which should be understood both from employee and the employer perspectives. For example, primary care givers have lower time endowment to allocate to market work. By the same token, groups disadvantaged due to remote location, disability etc. may be at disadvantage when compared to workers without such handicaps. While the conjecture of Goldin is attractive, empirical evidence is scarce and at times contradictory. In this project, we provide a battery of tests Goldin’s conjecture, analyzing the role of working time flexibility in determining wages and employment.

First, from an employee perspective, we hypothesize that demand for flexibility varies at different stages of the life-cycle. If the demand for flexibility indeed drives the (adjusted) wage gaps, then one expect a life-cycle pattern in adjusted wage gaps. In the absence of flexible arrangements, the demand for flexibility might also be reflected in more selective employment patterns. This hypothesis will be tested empirically, with the use of a novel proposed estimation method, which allows to isolate age, cohort and time effects in adjusted wage gaps. The study will be done for a wide variety of countries. Second, also taking the employee perspective, we will infer the true value of working time flexibility to workers. Non-standard work arrangements allow to engage in other spheres of life, but in many societies carry a social stigma. We will propose a large-scale framed field experiment to infer the true value of working time flexibility among workers, controlling for their outside options and household situation.

Third, from an employer perspective, we formulate the hypothesis that managers from a disadvantaged group will not tolerate high wage penalty on time inflexibility among their subordinates. To this end, we will develop and utilize a novel dataset on female managers across Europe and industry-level adjusted gender wage gaps (as well as their between firm dispersion). We will provide a variety of identification strategies to inspect the causality in this relationship.

Fourth, from a household perspective, taxes and social transfers may disproportionally tax the second earner’s labor supply, thus making it disadvantageous to supply labor. So may the childcare costs. We will extend a standard tax-benefit microsimulation model to account for the latter for a selection of the European countries, thus obtaining a shadow price of working time flexibility across countries. Finally, fifth, we will analyze the links between the supply of flexible work agreements and labor market inequality. We will explore ways flexible working arrangements influence labor market inequality across the EU, including selective patterns of employment, changes in within gender inequality and assortative mating.

The project contributes to the literature in three respects. First, we provide a wide battery of tests to an important hypothesis concerning the origins of labor market inequality in a wide, comparative context across countries. Second, we provide several methodological innovations (concerning estimation techniques and identification strategies) as well as methodological diversity (econometrics, simulations and experiments). Third, we will separate the role of the supply side factors (on the side of the employers) from demand side factors (the working time flexibility to combine personal and professional life).

The benefits of international cooperation are threefold. First, the teams complement each other in terms of skills, which permits pushing the frontier of research. Second, given the international composition of the team, the comparative economics angle can be based on local expertise on top of being data driven. Third, the capacity building for both partners will permit broader reach of this and future research in the field, thus contributing to the internationalization of Polish and Lithuanian science in our field.