This article identifies the part‐time wage effect, using hours variation caused by the social security rules. We show that work hours and wages drop sharply at ages 62 and 65. We argue that the hours decline causes the wage decline, resulting in a 25% wage penalty for men who cut their work week from 40 to 20 hours. However, we find little evidence for such an effect among women. We also show that models that fail to account for the joint determination of hours and wages will understate the labor supply response to a tax change by about 26%.
Authors
CPP Co-Director
Eric is the Montague Burton Professor of Industrial Relations and Labour Economics at the University of Cambridge and Professor of Economics at UCL.
Daniel Aaronson
Journal article details
- DOI
- 10.1086/381252
- Publisher
- The University of Chicago Press Journals
- Issue
- Volume 22, No. 2, April 2004, pages 329-252
Suggested citation
Aaronson, D and French, E. (2004). 'The Effect of Part‐Time Work on Wages: Evidence from the Social Security Rules' 22, No. 2(2004), pp.329–252.
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