Paying the price for reconciling work and family life: Comparing the wage penalty for women's part-time work in Britain, Germany and the United States

Abstract

A comparison of the institutional context of part-time employment in Britain, Germany and the United States forms the backdrop for this study of women's part-time work and wage penalties in each country. Results using panel data and fixed-effects wage estimates show three distinct “part-time regimes”. Germany has the lowest female labour force participation rates, and the smallest penalties for part-time employment. The United States and Britain each have steep penalties for part-time work, but part-time work is much more prevalent in Britain. We conclude that family policy, welfare state provision and labour market structure behave jointly to determine distinct models of work-family balance and the financial consequences associated with them.

Acknowledgements

We are grateful to Karl Ulrich Mayer and the Max Planck Institute for Social Science Research for support during the early stages of this research. Three anonymous reviewers read the manuscript with great care, and we are grateful for their critical comments. We are indebted to Janet Gornick for her knowledgeable substantive feedback and keen editorial advice. Thanks also to Antje Mertens and Anne Nolan for their comments on the methodology. The paper was substantially improved by these readers. All errors remain our own.

Notes

1. Space limitations unfortunately forced us to exclude African-Americans from the US analyses, and women from states of the former East in the German analyses. Differences in family structure and labour market behaviour argued against pooling these groups with their respective majority groups.

2. Figures taken from OECD National Accounts 1997, Table 8, the income and outlay account for each country. Calculations follow O'Donoghue and Sutherland (1999).

3. Legislation introduced in April 1999 in Germany changed the incentive structure for marginal employment slightly and had little impact on main-job marginal employment among married women (O'Reilly and Bothfeld 2002).

4. The modal number of hours worked is 37 in Britain, 20 hours among women working fewer than 35 hours per week. Over one-quarter of working women worked 35–37 hours, less than 10 per cent worked 30–34 hours. We also note (unconditional) wages for women working 30–34 hours were closer to the wages of women working 20 hours than to the wages of women working at least 35 hours.

5. Alternatively, we could have used fixed effects and instrumental variables (IV) estimation to address the potential bias in the estimate of the part-time wage penalty. Given our uncertainty about finding appropriate instruments, we chose instead to rely on the two-part strategy described above.

6. A robust regression-based Hausman test (Wooldridge 2002) rejects the random effects model.

7. Supplementary analysis of the British data using a 30-hour full-time employment cut-off for all women found nearly identical penalties among mothers.

Additional information

Notes on contributors

Frances McGinnity

Frances McGinnity is a researcher at the Economic and Social Research Institute, Dublin, Ireland and was previously at the Max Planck Institute for Human Development in Berlin, Germany. She has written a book entitled Welfare for the Unemployed in Britain and Germany: Who Benefits?, and a number of journal articles comparing Britain and Germany from a comparative, longitudinal perspective. Her current interests also include female labour supply and work/life balance in Ireland after the boom.

Patricia McManus

Patricia A. McManus is Associate Professor of Sociology at Indiana University. Her current research interests include the relationship between family processes, social policies and economic well-being in the United States and Europe, the impact of residential mobility on couples' work careers in the United States, and the economic integration of immigrants in the United States and Europe.