Timing and fragmentation of daily working hours arrangements and income inequality: an earnings treatment effects approach with German time use diary data

Traditional well-being analyses based on money income needs to be broadened by its time dimension. In the course of time the traditional full-time work is diminishing and new labour arrangements are discussed (keyword: flexible labour markets) with consequences on the daily work arrangements. Our study is contributing to the research on economic well-being and working hours arrangements by adding insights into particular daily work effort characteristics and its resulting income distribution. The work effort characteristics we regard is about labour market flexibility with focus on relations between the daily timing of work and its fragmentation, and its consequences on the income distribution. Whereas the first part of our study is describing the distribution of timing and fragmentation of daily work time and its resulting income based on more than 35.000 diaries of the most recent German Time Budget Survey 2001/2002, the second part of our study quantifies determinants of arrangement specific earnings functions detecting significant explanatory patterns of what is behind. The related economic theory is a human capital approach in a market and non-market context, extended by non-market time use, the partner’s working condition, social networking as well as household and regional characteristics. The econometrics use a treatment effects type interdependent estimation of endogenous participation in a daily working hour pattern (self-selection) and pattern specific earnings function explanation. The overall result: Individual earnings in Germany are dependent on and significant different with regard to the daily working hours arrangement capturing timing and fragmentation of work. Market and non-market factors are important and significant in explaining participation and earnings thereof.