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Do the 'Working Poor' Stay Poor? An Analysis of Low Pay Transitions in Italy

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  • Cappellari, Lorenzo

Abstract

This paper uses survey panel data to look at transition probabilities at the bottom of the Italian earnings distribution. The econometric analysis is characterized by a proper treatment of the initial conditions problem and by the investigation of genuine state dependence, the extent with which low pay probabilities depend upon the past experience of low pay other things equal. Results indicate that initial conditions are endogenous and that genuine state dependence can be relevant in determining low pay persistence. On the other hand, individual attributes are found to affect on transition probabilities, although to a limited extent. Copyright 2002 by Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.

Volume (Year): 64 (2002)
Issue (Month): 2 (May)
Pages: 87-110

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Handle: RePEc:bla:obuest:v:64:y:2002:i:2:p:87-110

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  1. Cappellari, Lorenzo, 2000. "The Covariance Structure of Italian Male Wages," Manchester School, University of Manchester, vol. 68(6), pages 659-84, December.
  2. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
  3. Sloane, P J & Theodossiou, I, 1996. "Earnings Mobility, Family Income and Low Pay," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(436), pages 657-66, May.
  4. O'Higgins, Niall, 1994. "YTS, Employment, and Sample Selection Bias," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 605-28, October.
  5. Lorenzo Cappellari, 1999. "Low-Wage Mobility in the Italian Labour Market," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 531, University of Warwick, Department of Economics.
  6. Lorenzo Cappellari, 1999. "Low-pay transitions and attrition bias in Italy : An analysis using simulation based estimation," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 532, University of Warwick, Department of Economics.
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