Working Hours of Part-timers and the Measurement of Firm-level Productivity

This paper empirically quantifies the effect of data availability on firm-level working hours of part-timers on the accuracy of productivity measurement using data from the Basic Survey of Japanese Business Structure and Activities. According to the analysis: (1) firm-level working hours of part-timers are quite heterogeneous even within the same industry; (2) when using industry average working hours, the bias of measured productivity is around 4% at the sample average and from 1% to 2% at the sample median. The biases are especially large for service industries such as restaurants, retail, and hotels where the part-time ratio is high; (3) however, the correlation between measured productivities using industry average working hours and those using firm-level hours is very high, which suggests the mismeasurement using industry aggregate data in analyzing effects of firm characteristics or policy measures is small; (4) it is desirable to calculate full-time and part-time hours separately in productivity analyses covering service industries. In considering the importance of planning a valid economic growth strategy, enriching firm-level statistics is a cost-effective investment.