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Low-Paid Employment and Unemployment Dynamics in Australia

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  • HIELKE BUDDELMEYER
  • WANG-SHENG LEE
  • MARK WOODEN

Abstract

This article uses longitudinal data from the Household, Income and Labour Dynamics in Australia (or HILDA) Survey to examine the extent to which the relatively high rates of transition from low-paid employment into unemployment are the result of disadvantageous personal characteristics or are instead a function of low-paid work itself. Dynamic random effects probit models of the likelihood of unemployment are estimated. After controlling for unobserved heterogeneity and initial conditions, we find that, relative to high-paid employment, low-paid employment is associated with a higher risk of unemployment, but this effect is only significant among women. We also find only weak evidence that low-paid employment is a conduit for repeat unemployment. Copyright © 2009 The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal Economic Record.

Volume (Year): 86 (2010)
Issue (Month): 272 (03)
Pages: 28-48

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Handle: RePEc:bla:ecorec:v:86:y:2010:i:272:p:28-48

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  1. Miller, Paul W, 1989. "Low-Wage Youth Employment: A Permanent or Transitory State?," The Economic Record, The Economic Society of Australia, vol. 65(189), pages 126-35, June.
  2. Arulampalam, W., 1998. "A Note on Estimated Coefficients in Random Effects Probit Models," The Warwick Economics Research Paper Series (TWERPS) 520, University of Warwick, Department of Economics.
  3. Stewart, M.B. & Swaffield, J.K., 1997. "Low Pay Dynamics and Transition Probabilities," The Warwick Economics Research Paper Series (TWERPS) 495, University of Warwick, Department of Economics.
  4. Mark Wooden & Nicole Watson, 2007. "The HILDA Survey and its Contribution to Economic and Social Research (So Far)," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 208-231, 06.
  5. Uhlendorff, Arne, 2006. "From No Pay to Low Pay and Back Again? A Multi-State Model of Low Pay Dynamics," IZA Discussion Papers 2482, Institute for the Study of Labor (IZA).
  6. Cappellari, Lorenzo, 2002. " Do the 'Working Poor' Stay Poor? An Analysis of Low Pay Transitions in Italy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(2), pages 87-110, May.
  7. Alfonso Sousa-Poza, 2004. "Is the Swiss Labor Market Segmented? An Analysis Using Alternative Approaches," LABOUR, CEIS, vol. 18(1), pages 131-161, 03.
  8. Mark B. Stewart, 2002. "The Inter-related Dynamics of Unemployment and Low Pay," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B2-4, International Conferences on Panel Data.
  9. Sloane, P J & Theodossiou, I, 1996. "Earnings Mobility, Family Income and Low Pay," Economic Journal, Royal Economic Society, vol. 106(436), pages 657-66, May.
  10. Daniel Perkins & Rosanna Scuttella, 2008. "Improving Employment Retention and Advancement of Low-Paid Workers," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(1), pages 97-114, March.
  11. Lorenzo Cappellari & Stephen P. Jenkins, 2008. "Estimating low pay transition probabilities accounting for endogenous selection mechanisms," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 57(2), pages 165-186.
  12. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
  13. MARK WOODEN & ROGER WILKINS & SEAMUS McGUINNESS, 2007. "Minimum Wages And The ‘Working Poor’," Economic Papers, The Economic Society of Australia, vol. 26(4), pages 295-307, December.
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Cited by:
  1. Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2013. "The Scarring Effects of Unemployment, Low Pay and Skills Under-utilisation in Australia Compared," IZA Discussion Papers 7440, Institute for the Study of Labor (IZA).
  2. Mosthaf, Alexander, 2011. "Low-wage jobs - stepping stones or just bad signals?," IAB Discussion Paper 201111, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Jeff Borland & David Johnston, 2010. "How Does a Worker's Labour Market History Affect Job Duration?," Melbourne Institute Working Paper Series wp2010n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  4. Cai, Lixin, 2013. "State-Dependence and Stepping Stone Effects of Low Pay Employment in Australia," MPRA Paper 50522, University Library of Munich, Germany.
  5. Cai, Lixin, 2013. "The Dynamics of Low Pay Employment in Australia," MPRA Paper 50521, University Library of Munich, Germany.
  6. Mavromaras, Kostas G. & Zhu, Rong, 2013. "Labour Force Participation of Mature Age Men in Australia: The Role of Spousal Participation," IZA Discussion Papers 7581, Institute for the Study of Labor (IZA).

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