The impact of part-time work on firm productivity: evidence from Italy

In this article, we explore the impact of part-time work on firm productivity. Using a large panel data set of Italian corporations for the period 2000-2010, we first estimate firms' yearly productivity by removing the output contribution of the labor and capital inputs aggregates. We use different approaches aimed at solving input simultaneity, including a version of Ackerberg et al.'s ( 2015), control function approach, that also accounts for firm fixed effects. We then match the productivity estimates with rich information on the firms' use of part-time work obtained from survey data for the years 2005, 2007, and 2010 and estimate the impact of part-time work on productivity. We find that a 10% increase in the share of part-timers reduces productivity by 1.45%. The results suggest that this harmful effect stems from horizontal rather than vertical part-time arrangements. We also find that firms declaring to use part-time work to accommodate workers' requests suffer the most. Moreover, we show that the so-called "flexible" and "elastic"clauses are successful in cushioning the negative impact associated with part-time work.