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Low-Wage Mobility in the Italian Labour Market

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Author Info
Lorenzo Cappellari (Department of Economics, University of Warwick)

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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.

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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 531.

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Length: 32 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:wrk:warwec:531

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Related research
Keywords: low-pay ; wage mobility ; initial conditions problem;

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Find related papers by 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

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  1. Pavlopoulos, Dimitris & Muffels, Ruud & Vermunt, Jeroen-K., 2005. "Wage Mobility in Europe. A Comparative Analysis Using restricted Multinomial Logit Regression," MPRA Paper 229, University Library of Munich, Germany. [Downloadable!]
  2. Paulo Madruga & José Vieira, 2004. "Regions and Low-Wage Mobility in Portugal," ERSA conference papers ersa04p55, European Regional Science Association. [Downloadable!]
  3. José Cabral Vieira & António Menezes & Patrícia Gabriel, 2005. "Low pay, higher pay and job quality: empirical evidence for Portugal," Applied Economics Letters, Taylor and Francis Journals, vol. 12(8), pages 505-511, June. [Downloadable!] (restricted)
  4. Carlos Barros & Isabel Proenca & Jose Cabral Vieira, 2005. "Low-wage employment in Portugal: a mixed logit approach," Labor and Demography 0508001, EconWPA. [Downloadable!]
    Other versions:
  5. Luis Diaz-Serrano & Jose A. Cabral Vieira, 2005. "Low Pay, Higher Pay and Job Satisfaction within the European Union: Empirical Evidence from Fourteen Countries," IZA Discussion Papers 1558, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. 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). [Downloadable!]
  7. Clark, Ken & Kanellopoulos, Nikolaos C., 2009. "Low Pay Persistence in European Countries," IZA Discussion Papers 4183, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Fabrizio Patriarca, 2004. "I differenziali di mobilità salariale in Italia dal 1986 al 1996," Working Papers 3 DE-ISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2004. [Downloadable!]
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