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Low-Wage Employment in Portugal: A Mixed Logit Approach

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Author Info

  • Barros, Carlos Pestana

    ()
    (Universidade Técnica de Lisboa)

  • Proença, Isabel

    ()
    (Universidade Técnica de Lisboa)

  • Vieira, José A. Cabral

    ()
    (University of the Azores)

Abstract

In this paper, we examine the determinants of low-wage employment in Portugal. For this purpose, we use a data file of the European Community Household Panel (ECHP) for the years 1998 and 1999. In order to take into account unobserved heterogeneity in the data, a random-parameter logit model is used to analyse the probability of a worker receiving a low wage. The results indicate that the consideration that the effects of the explanatory variables are the same across all individuals, such as is assumed in most of the literature may be misleading. From the policy perspective, this implies that the use of a single instrument in order to combat low-wage employment is inappropriate to satisfy the whole population. In view of this, policies tailored by clusters would be more appropriate.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1667.

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Length: 24 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1667

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Related research

Keywords: low-wage employment; random-parameter logit model; public policy;

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References

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  1. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, October.
  2. Cardoso, Ana Rute, 1998. "Earnings Inequality in Portugal: High and Rising?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(3), pages 325-43, September.
  3. Lorenzo Cappellari, 1999. "Low-Wage Mobility in the Italian Labour Market," The Warwick Economics Research Paper Series (TWERPS) 531, University of Warwick, Department of Economics.
  4. 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.
  5. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
  6. Andrew Chesher & J. M. C. Santos Silva, 2002. "Taste Variation in Discrete Choice Models," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 147-168.
  7. José Cabral Vieira, 2005. "Low-wage mobility in the Portuguese labour market," Portuguese Economic Journal, Springer, vol. 4(1), pages 1-14, 04.
  8. Rannia Leontaridi & Peter Sloane, 2001. "Measuring The Quality Of Jobs," LoWER Working Papers wp7, AIAS, Amsterdam Institute for Advanced Labour Studies.
  9. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  10. Jan Rouwendal & Erik Meijer, 2001. "Preferences for Housing, Jobs, and Commuting: A Mixed Logit Analysis," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 475-505.
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Cited by:
  1. Mendes, Rute & van den Berg, Gerard J & Lindeboom, Maarten, 2007. "An empirical assessment of assortative matching in the labor market," Working Paper Series 2007:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Wicker, Pamela & Prinz, Joachim & von Hanau, Tassilo, 2012. "Estimating the value of national sporting success," Sport Management Review, Elsevier, vol. 15(2), pages 200-210.

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