Minimum Hours Constraints: The Role of Organizational Practices

We investigate why firms differ in their policies toward part-time employment. We propose a new measure of minimum hours constraints (MHC) at the firm level that accounts for employees’ observable characteristics and their expected probabilities of working part-time. We apply our method to the Structure of Earnings Survey data from 19 European countries. We find substantial variation in MHC within 12 economic sectors, which suggests a significant role of firm-specific factors. To assess the role of firms’ organizational practices, we analyze the correlation between the MHC faced by core personnel and by administrative workers. We find that across all economic sectors and countries, non-administrative workers are significantly more likely to face MHC in firms where administrative workers face more rigid MHC. Our results suggest that the quantitative importance of firm-specific practices is similar to the importance of sector-specific factors.