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The Scarring Effects of Unemployment, Low Pay and Skills Under-utilisation in Australia Compared

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Author Info

  • Mavromaras, Kostas G.

    ()
    (NILS, Flinders University)

  • Sloane, Peter J.

    ()
    (Swansea University)

  • Wei, Zhang

    ()
    (NILS, Flinders University)

Abstract

There is a substantial literature on the scarring effects of unemployment on future employment prospects and a smaller one on the scarring effects of low pay, but the possibility that skills mismatch in the form of skills under-utilisation, may also have similar detrimental effects, has not previously been considered. This paper uses the first ten waves of the HILDA survey data to investigate the inter-related dynamics of unemployment, low pay and skills under-utilisation in Australia, focussing on differences by gender and educational pathways. It shows that skills under-utilisation also exhibits scarring effects, in addition to earlier evidence on wage penalties and reduced job satisfaction.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7440.

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Length: 30 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7440

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Keywords: education pathways; state dependence; dynamic estimation; job quality;

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References

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  1. Francis Green & Yu Zhu, 2008. "Overqualification, Job Dissatisfaction, and Increasing Dispersion in the Returns to Graduate Education," Studies in Economics 0803, Department of Economics, University of Kent.
  2. Nicole Watson & Mark Wooden, 2004. "The HILDA Survey Four Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(3), pages 343-349, 09.
  3. Ken Clark & Nikolaos C. Kanellopoulos, 2009. "Low Pay Persistence in European Countries," SOEPpapers on Multidisciplinary Panel Data Research 207, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. 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.
  5. Mavromaras, Kostas G. & McGuinness, Seamus & O'Leary, Nigel C. & Sloane, Peter J. & Fok, Yin King, 2007. "The Problem of Overskilling in Australia and Britain," IZA Discussion Papers 3136, Institute for the Study of Labor (IZA).
  6. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  7. Flaig, Gebhard & Licht, Georg & Steiner, Viktor, 1993. "Testing for state dependence effects in a dynamic model of male unemployment behaviour," ZEW Discussion Papers 93-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Mavromaras, Kostas & McGuinness, Seamus & Fok, Yin King, 2009. "Overskilling Dynamics and Education Pathways," Papers WP307, Economic and Social Research Institute (ESRI).
  9. Baert, Stijn & Cockx, Bart & Verhaest, Dieter, 2013. "Overeducation at the start of the career: Stepping stone or trap?," Labour Economics, Elsevier, vol. 25(C), pages 123-140.
  10. Hielke Buddelmeyer & Wang-Sheng Lee & Mark Wooden, 2009. "Low-Paid Employment and Unemployment Dynamics in Australia," Melbourne Institute Working Paper Series wp2009n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  11. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  12. Kostas Mavromaras & Seamus McGuinness & Yin King Fok, 2007. "Assessing the Incidence and Wage Effects of Over-skilling in the Australian Labour Market," Melbourne Institute Working Paper Series wp2007n32, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  13. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  14. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
  15. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
  16. Richard Desjardins & Kjell Rubenson, 2011. "An Analysis of Skill Mismatch Using Direct Measures of Skills," OECD Education Working Papers 63, OECD Publishing.
  17. Narendranathan, W. & Elias, P., 1990. "Influences of Past History on the Incidence of Youth Unemployment: Empirical Finding for the U.K," The Warwick Economics Research Paper Series (TWERPS) 369, University of Warwick, Department of Economics.
  18. Muhleisen, Martin & Zimmermann, Klaus F., 1994. "A panel analysis of job changes and unemployment," European Economic Review, Elsevier, vol. 38(3-4), pages 793-801, April.
  19. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
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