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Low-Wage Mobility in the Italian Labour Market

Author

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  • Lorenzo Cappellari

    (Department of Economics, University of Warwick)

Abstract

This paper uses SHIW panel data for 1993 and 1995 to model individual transition probabilities at the bottom of the Italian wage distribution. The analysis is based on a bivariate probit model with endogenous switching which allows tackling the initial conditions problem, i.e. the potential endogeneity of the conditioning starting state. Results show the appropriateness of such a choice : the correlation between state and transition probabilities is significantly different from zero, while overlooking endogeneity leads to overstatement of both size and significance of coefficients in the transition equation. The paper shows that while some factors such as education, sex and geographical location have an effect on low-pay persistence, job related variables are more effective in avoiding falls into low-pay from higher pay. It is also shown how raw persistence involves a considerable share of true state dependence, pointing towards the existence of low-pay stigma.

Suggested Citation

  • 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.
    • Handle: RePEc:wrk:warwec:531
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/papernew.pdf
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    Cited by:

    1. Dimitris Pavlopoulos & Ruud Muffels & Jeroen Vermunt, 2010. "Wage mobility in Europe. A comparative analysis using restricted multinomial logit regression," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(1), pages 115-129, January.
    2. Fabrizio Patriarca, 2004. "I differenziali di mobilità salariale in Italia dal 1986 al 1996," Working Papers - Dipartimento di Economia 3-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2004.
    3. Dimitris Pavlopoulos & Didier Fouarge, 2010. "Escaping low pay: do male labour market entrants stand a chance?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(8), pages 908-927, November.
    4. Grün, Carola & Mahringer, Helmut & Rhein, Thomas, 2011. "Low-wage jobs: a means for employment integration of the unemployed? : evidence from administrative data in Germany and Austria," IAB-Discussion Paper 201101, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Carlos Barros & Isabel Proenca & Jose Cabral Vieira, 2005. "Low-wage employment in Portugal: a mixed logit approach," Labor and Demography 0508001, University Library of Munich, Germany.
    6. Augustin de Coulon & Boris A. Zürcher, 2001. "Low-Pay Mobility in the Swiss Labor Market," Working Papers 447, Queen Mary University of London, School of Economics and Finance.
    7. Kamila Fialová, 2022. "Low-Wage Employment in Czechia: A Persistent Burden," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(6), pages 475-498, June.
    8. Lorenzo Cappellari, 2007. "Earnings mobility among Italian low-paid workers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(2), pages 465-482, April.
    9. 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).
    10. Paulo Madruga & José Vieira, 2004. "Regions and Low-Wage Mobility in Portugal," ERSA conference papers ersa04p55, European Regional Science Association.
    11. Augustin de Coulon & Boris A. Zürcher, 2001. "Low-Pay Mobility in the Swiss Labor Market," Working Papers 447, Queen Mary University of London, School of Economics and Finance.
    12. Vieira, J.A.C. & Madruga, P., 2004. "Regions and Low-Wage Mobility in Portugal, 1996-2000," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 4(2).
    13. Lorenzo Cappellari, 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, vol. 64(2), pages 87-110, May.
    14. Carola Grün & Helmut Mahringer & Thomas Rhein, 2010. "Low-wage Jobs: A Means for Employment Integration of the Unemployed? Evidence from Administrative Data in Germany and Austria," WIFO Working Papers 383, WIFO.
    15. Francisco Silva & José Vieira & António Pimenta & João Teixeira, 2018. "Duration of low-wage employment: a study based on a survival model," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(2), pages 286-299, February.
    16. Diaz-Serrano, Luis & Vieira, José António Cabral, 2005. "Low Pay, Higher Pay and Job Satisfaction within the European Union: Empirical Evidence from Fourteen Countries," IZA Discussion Papers 1558, Institute of Labor Economics (IZA).
    17. Lubica Stiblarova, 2022. "European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(9-10), pages 681-702, August.
    18. Jose Cabral Vieira & Antonio Menezes & Patricia Gabriel, 2005. "Low pay, higher pay and job quality: empirical evidence for Portugal," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 505-511.
    19. Schank Thorsten & Schnabel Claus & Stephani Jens, 2009. "Geringverdiener: Wem und wie gelingt der Aufstieg? / Low-Wage Earners: Who Manages to Reach Higher Wage Levels?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(5), pages 584-614, October.

    More about this item

    Keywords

    low-pay ; wage mobility ; initial conditions problem;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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