TY - RPRT A1 - Schrenker, Annekatrin T1 - Causal Misperceptions of the Part-Time Pay Gap N2 - This paper studies if workers infer from correlation about causal effects in the context of the part-time wage penalty. Differences in hourly pay between full-time and part-time workers are strongly driven by worker selection and systematic sorting. Ignoring these selection effects can lead to biased expectations about the consequences of working part-time on wages (’selection neglect bias’). Based on representative survey data from Germany, I document substantial misperceptions of the part-time wage gap. Workers strongly overestimate how much part-time workers in their occupation earn per hour, whereas they are approximately informed of mean full-time wage rates. Consistent with selection neglect, those who perceive large hourly pay differences between full-time and part-time workers also predict large changes in hourly wages when a given worker switches between full-time and part-time employment. Causal analyses using a survey experiment reveal that providing information about the raw part-time pay gap increases expectations about the full-time wage premium by factor 1.7, suggesting that individuals draw causal conclusions from observed correlations. De-biasing respondents by informing them about the influence of worker characteristics on observed pay gaps mitigates selection neglect. Subjective beliefs about the part-time/full-time wage gap are predictive of planned and actual transitions between full-time and part-time employment, necessitating the prevention of causal misperceptions. T3 - Berlin School of Economics Discussion Papers - 10 KW - part-time pay gap, wage expectations, selection neglect, causal misperceptions Y1 - 2023 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-47143 UR - https://berlinschoolofeconomics.de/insights/bse-discussion-papers U6 - https://doi.org/10.48462/opus4-4714 ET - No. 10 ER -