Does subsidized part-time employment help unemployed workers to find full-time employment?

Abstract

We study whether part-time work acts as a bridge towards full-time work for unemployed workers in Spain. We consider a time period when firms were encouraged to create part-time jobs by cutting employers' social security contributions. We follow the timing-of-event approach and estimate the causal effect of part-time work on the exit rate to full-time work using a multivariate duration model. We find that, after a cut in the hiring cost of part-timers, taking up a short part-time job reduced the expected time until next full-time job in the recession years. However, after an additional cut, part-time working has prolonged the expected time without a full-time job.