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Low-Paid Employment and Unemployment Dynamics in Australia

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  • Hielke Buddelmeyer

    ()
    (Institute of Applied Economic and Social Research, The University of Melbourne)

  • Wang-Sheng Lee

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Mark Wooden

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper 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-wage employment is a conduit for repeat unemployment.

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2009n06.

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Length: 35 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:iae:iaewps:wp2009n06

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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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References

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  1. 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.
  2. Arne Uhlendorff, 2006. "From No Pay to Low Pay and Back Again?: A Multi-State Model of Low Pay Dynamics," Discussion Papers of DIW Berlin 648, DIW Berlin, German Institute for Economic Research.
  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. Alfonso Sousa-Poza, 2004. "Is the Swiss Labor Market Segmented? An Analysis Using Alternative Approaches," LABOUR, CEIS, vol. 18(1), pages 131-161, 03.
  5. 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.
  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. 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.
  8. 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.
  9. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
  10. 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.
  11. 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.
  12. 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.
  13. 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.
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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. 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).
  3. 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].
  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. 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.

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