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Low-Wage Jobs – Springboard to High-Paid Ones?

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Author Info

  • Andreas Knabe

    (Otto-von-Guericke University Magdeburg and CESifo)

  • Alexander Plum

    ()
    (Otto-von-Guericke University Magdeburg)

Abstract

We examine whether low-paid jobs have an effect on the probability that unemployed persons obtain better-paid jobs in the future (springboard effect). We make use of data from the German Socio-Economic Panel (SOEP) and apply a dynamic random-effects probit model. Our results suggest that low-wage jobs can act as springboards to better-paid work. The improvement of the chance to obtain a high-wage job by accepting low-paid work is particularly large for less-skilled persons and for individuals with longer periods of unemployment. Low-paid work is less beneficial if the job is associated with a low social status.

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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 246.

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Length: 29 pages
Date of creation: 26 Jul 2012
Date of revision: 26 Jul 2012
Handle: RePEc:rtv:ceisrp:246

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

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Keywords: dynamic random effects models; low pay dynamics; state dependence; unemployment dynamics;

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References

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  1. Stewart, Mark, 2006. "The Inter-related Dynamics of Unemployment and Low-Wage Employment," The Warwick Economics Research Paper Series (TWERPS) 741, University of Warwick, Department of Economics.
  2. 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.
  3. Arne Uhlendorff, 2006. "From No Pay to Low Pay and Back Again?: A Multi-State Model of Low Pay Dynamics," Discussion Papers of DIW Berlin 648, DIW Berlin, German Institute for Economic Research.
  4. Mosthaf, Alexander & Schank, Thorsten & Schnabel, Claus, 2009. "Low-wage employment versus unemployment: which one provides better prospects for women?," IWQW Discussion Paper Series 14/2009, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
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  6. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Schank, Thorsten & Schnabel, Claus & Stephani, Jens, 2008. "Geringverdiener: wem und wie gelingt der Aufstieg?," Discussion Papers 57, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  8. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
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  10. 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, vol. 57(2), pages 165-186.
  11. Vishwanath, Tara, 1989. "Job Search, Stigma Effect, and Escape Rate from Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 487-502, October.
  12. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
  13. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  14. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
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Cited by:
  1. Alexander Plum, 2014. "The British Low-Wage Sector and the Employment Prospects of the Unemployed," FEMM Working Papers 140004, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  2. Alam, Moudud & Carling, Kenneth & Nääs, Ola, 2013. "The effect of summer jobs on post-schooling incomes," Working Paper Series 2013:24, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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