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The Inter-related Dynamics of Unemployment and Low Pay

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  • Mark B. Stewart

    ()
    (University of Warwick)

Abstract

This paper examines the extent of state dependence in individual unemployment and low paid employment and the inter-related dynamics between the two. Evidence is presented that (after controlling for unobserved heterogeneity and initial conditions) the low paid are more likely to become unemployed and the unemployed more likely to be low paid on re-entry to employment. The impacts of unemployment and low pay are found to be insignificantly different from one another, both on the probability of unemployment in the next period and on the probability of low pay. Evidence is presented that low paid jobs act as the main conduit for repeat unemployment and considerably increase its probability. Those who get a better paid job eliminate the increased risk of repeat unemployment.

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Bibliographic Info

Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number B2-4.

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Date of creation: Jan 2002
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Handle: RePEc:cpd:pd2002:b2-4

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Keywords: unemployment; low pay; dynamics; state dependence; unobserved heterogeneity; wage mobility; dynamic random effects models; repeat unemployment; recurrent unemployment.;

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  1. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
  2. 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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  1. A burden on the taxpayer?
    by chris dillow in Stumbling and Mumbling on 2007-11-16 10:26:18
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