The Premium for Part-time Work in Australia

Abstract

We use fixed effects and difference-in-differences methodologies to investigate the nature of Australia’s part-time wage premium, a phenomenon not observed in other countries. Salary sacrifice and non-cash benefits, previously unexplored explanations, are eliminated. The premium is not explained by occupation and it is observed for people with only one change of employment status and for those with multiple changes. We find that changing from full-time to part-time work with the same employer results in a large and sustained increase in the hourly wage, whereas a temporary decrease in the hourly wage accompanies a change from part-time to full-time work with the same employer. Notably, we find no significant wage change when a move between full-time and part-time work is accompanied by a change of employer.