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Low-Wage Employment in Portugal: A Mixed Logit Approach

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Author Info
Carlos Pestana Barros (Technical University of Lisbon)
Isabel Proença (Technical University of Lisbon)
José Cabral Vieira () (University of the Azores and IZA Bonn)

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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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Publisher 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;

Other versions of this item:

Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Cardoso, Ana Rute, 1998. "Earnings Inequality in Portugal: High and Rising?," Review of Income and Wealth, Blackwell Publishing, vol. 44(3), pages 325-43, September.
  2. Jan Rouwendal & Erik Meijer, 2001. "Preferences for Housing, Jobs, and Commuting: A Mixed Logit Analysis," Journal of Regional Science, Blackwell Publishing, vol. 41(3), pages 475-505. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!]
  5. Chesher, Andrew & Santos Silva, J M C, 2002. "Taste Variation in Discrete Choice Models," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 147-68, January.
  6. Rannia LEONTARIDI and Peter SLOANE, . "Measuring The Quality Of Jobs," LoWER Working Papers wp7, AIAS, Amsterdam Institute for Advanced Labour Studies, revised Apr 2001. [Downloadable!]
  7. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, March. [Downloadable!]
  8. 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. [Downloadable!]
  9. José Cabral Vieira, 2005. "Low-wage mobility in the Portuguese labour market," Portuguese Economic Journal, Springer, vol. 4(1), pages 1-14, 04. [Downloadable!] (restricted)
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