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Earnings Mobility Among Italian Low Paid Workers

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  • Cappellari, Lorenzo

    ()
    (Università Cattolica del Sacro Cuore)

Abstract

This paper uses Italian panel data to analyse transition probabilities at the bottom of the earnings distribution during the 1990s. The analytical framework is characterised by the ability to account for the endogeneity of initial conditions, educational attainment and earnings attrition, providing a model that encompasses those applied by previous research. Results show that the three selection mechanisms are endogenous for the estimation of low pay transitions. The data also reveal considerable state dependence, i.e. the experience of low pay is found to raise, per se, the probability of subsequent low pay episodes. Low pay persistence and entry rates are found to be larger among female employees, the low educated, manual workers in small firms and workers from the South relative to otherwise comparable individuals.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1068.

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Length: 34 pages
Date of creation: Mar 2004
Date of revision:
Publication status: published in: Journal of Population Economics, 2007, 20 (3), 465-482
Handle: RePEc:iza:izadps:dp1068

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Keywords: low pay; earnings mobility; initial conditions; earnings attrition; education;

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References

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  1. 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, Department of Economics, University of Oxford, vol. 64(2), pages 87-110, May.
  2. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, Elsevier, vol. 89(5-6), pages 897-931, June.
  3. V.A. Hajivassiliou & P. A. Ruud, 1993. "Classical Estimation Methods for LDV Models Using Simulation," Econometrics, EconWPA 9311002, EconWPA.
  4. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 52(1), pages 24-50, January.
  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, International Conferences on Panel Data B2-4, International Conferences on Panel Data.
  6. Moshe Buchinsky & Jennifer Hunt, 1999. "Wage Mobility In The United States," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 81(3), pages 351-368, August.
  7. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, National Bureau of Economic Research, Inc, in: Studies in Labor Markets, pages 91-140 National Bureau of Economic Research, Inc.
  8. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers, National Bureau of Economic Research, Inc 0150, National Bureau of Economic Research, Inc.
  9. La Ferrara, Eliana & Alesina, Alberto, 2005. "Preferences for Redistribution in the Land of Opportunities," Scholarly Articles, Harvard University Department of Economics 4552533, Harvard University Department of Economics.
  10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  11. Cappellari, Lorenzo & Jenkins, Stephen P., 2002. "Modelling low income transitions," ISER Working Paper Series 2002-08, Institute for Social and Economic Research.
  12. Stewart, M.B. & Swaffield, J.K., 1997. "Low Pay Dynamics and Transition Probabilities," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 495, University of Warwick, Department of Economics.
  13. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(436), pages 639-49, May.
  14. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, Springer, vol. 13(4), pages 529-567.
  15. 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.
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