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Low-Wage Jobs - Stepping Stone or Poverty Trap?

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Author Info

  • Andreas Knabe
  • Alexander Plum

Abstract

We examine whether low-paid jobs have an effect on the occupational advancement probability of unemployed persons to obtain better-paid jobs in the future (stepping-stone effect). We make use of data from the German Socio-Economic Panel (SOEP) and apply a dynamic random-effects probit model. Our results suggest that low-wage jobs can act as stepping stones to better-paid work. The improvement of the chance to obtain a high-wage job by accepting low-paid work is particularly large for less-skilled persons and for individuals with longer unemployment experiences. Low-paid work is less beneficial if the job is also associated with a low social status.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 337.

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Length: 27 p.
Date of creation: 2010
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp337

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Related research

Keywords: low pay dynamics; unemployment dynamics; dynamic random effects models; state dependence;

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Cited by:
  1. Luiz de Mello & Mark A. Dutz, 2012. "Promoting Inclusive Growth : Challenges and Policies," World Bank Publications, The World Bank, number 16948, August.
  2. Dutz, Mark A. & Kessides, Ioannis & O'Connell, Stephen & Willig, Robert D., 2011. "Competition and innovation-driven inclusive growth," Policy Research Working Paper Series, The World Bank 5852, The World Bank.
  3. Cai, Lixin, 2013. "State-Dependence and Stepping Stone Effects of Low Pay Employment in Australia," MPRA Paper 50522, University Library of Munich, Germany.

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