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The Dynamics of Low Pay Employment in Australia

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  • Cai, Lixin

Abstract

Using the Household, Income and Labour Dynamics in Australia (HILDA) survey, this study shows that the largest proportion of low pay spells originated from higher pay; only a small proportion were from non-employment or recent graduates. While the majority of low pay spells transitioned to higher pay, a significant proportion ended up with non-employment. The multivariate analysis shows that workers who entered low pay from higher pay also have a higher hazard rate of transitioning to higher pay; and those who entered low pay from non-employment are more likely to return to non-employment. Union members, public sector jobs and working in medium to large size firms increase the hazard rate of transitioning to higher pay, while immigrants from non-English speaking countries and workers with health problems have a lower hazard rate of moving into higher pay. There is some evidence that the longer a worker is in low paid employment, the less likely they are to transition to higher pay.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50521.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:50521

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Keywords: Low pay; competing risk; Australia;

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References

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  1. Ian Watson, 2008. "Low Paid Jobs and Unemployment: Churning in the Australian Labour Market, 2001 to 2006," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(1), pages 71-96, March.
  2. 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, Royal Statistical Society, vol. 57(2), pages 165-186.
  3. Uhlendorff, Arne, 2006. "From No Pay to Low Pay and Back Again? A Multi-State Model of Low Pay Dynamics," IZA Discussion Papers 2482, Institute for the Study of Labor (IZA).
  4. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
  5. 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).
  6. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers, Department of Economics, University of Aberdeen 98-05, Department of Economics, University of Aberdeen.
  7. 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.
  8. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348.
  9. Baker, Michael & Melino, Angelo, 2000. "Duration dependence and nonparametric heterogeneity: A Monte Carlo study," Journal of Econometrics, Elsevier, Elsevier, vol. 96(2), pages 357-393, June.
  10. Lixin Cai, 2007. "The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2007n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  11. Hielke Buddelmeyer & Wang-Sheng Lee & Mark Wooden, 2010. "Low-Paid Employment and Unemployment Dynamics in Australia," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 86(272), pages 28-48, 03.
  12. Euan Phimister & Ioannis Theodossiou, 2009. "Gender differences in low pay labour mobility and the national minimum wage," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages i122-i146, April.
  13. Dolton, Peter J & van der Klaauw, Wilbert, 1995. "Leaving Teaching in the UK: A Duration Analysis," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(429), pages 431-44, March.
  14. 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, Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(1), pages 97-114, March.
  15. Blank, Rebecca M., 1989. "Analyzing the length of welfare spells," Journal of Public Economics, Elsevier, Elsevier, vol. 39(3), pages 245-273, August.
  16. Lixin Cai & Guyonne Kalb, 2006. "Health status and labour force participation: evidence from Australia," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 241-261.
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