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Escaping low pay: do male labour market entrants stand a chance?

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Author Info

  • Dimitris Pavlopoulos
  • Didier Fouarge

Abstract

Purpose – The purpose of this paper is to investigate the extent and the human-capital determinants of low-wage mobility for labour market entrants in the UK and Germany. Design/methodology/approach – Using panel data for the UK (BHPS) and Germany (GSOEP), a competing-risks duration model is applied that allows the study of transitions from low pay to competing destination states: higher pay, self-employment, unemployment and inactivity. Unobserved heterogeneity is tackled by a non-parametric mass-point approach. Findings – It is found that low pay is only a temporary state for most young job starters. However, there is a small group of job starters that is caught in a trap of low pay, unemployment or inactivity. In the UK, job starters escape from low pay mainly by developing firm-specific skills. In Germany, involvement in formal vocational training and the attainment of apprenticeship qualifications account for low pay exits. Originality/value – Over the past decades, unemployment and low-wage employment have emerged as major challenges facing young labour market entrants. While most empirical studies focus exclusively on the transition from low pay to high pay, the paper shows that a significant percentage of young entrants are caught in a low-pay-non-employment trap. Moreover, it is shown that, depending on the institutional context, different types of human capital investments can account for a successful low-pay exit.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

Volume (Year): 31 (2010)
Issue (Month): 8 (November)
Pages: 908-927

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Handle: RePEc:eme:ijmpps:v:31:y:2010:i:8:p:908-927

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References

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  1. Henry S. Farber & Robert Gibbons, 1994. "Learning and Wage Dynamics," Working Papers 707, Princeton University, Department of Economics, Industrial Relations Section..
  2. Gagliarducci, Stefano, 2005. "The dynamics of repeated temporary jobs," Labour Economics, Elsevier, vol. 12(4), pages 429-448, August.
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  13. Harhoff, Dietmar & Kane, Thomas J, 1996. "Is the German Apprenticeship System a Panacea for the US Labour Market?," CEPR Discussion Papers 1311, C.E.P.R. Discussion Papers.
  14. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
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  16. Wolfgang Franz & Joachim Inkmann & Winfried Pohlmeier & Volker Zimmermann, 2000. "Young and Out in Germany (On Youths? Chances of Labor Market Entrance in Germany)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 381-426 National Bureau of Economic Research, Inc.
  17. Lisa M. Powell, 2002. "Joint Labor Supply and Childcare Choice Decisions of Married Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 106-128.
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Cited by:
  1. repec:ese:iserwp:2009-26 is not listed on IDEAS
  2. Sohn, Christophe & Reitel, Bernard & Walther, Olivier, 2009. "Cross-border metropolitan integration in Europe (Luxembourg, Basel and Geneva)," IRISS Working Paper Series 2009-02, IRISS at CEPS/INSTEAD.
  3. Philippe Van Kerm, 2013. "Generalized measures of wage differentials," Empirical Economics, Springer, vol. 45(1), pages 465-482, August.

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