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The Inter-related Dynamics of Unemployment and Low-Wage Employment

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Author Info
Stewart, Mark (University of Warwick)

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Abstract

This paper examines the extent of state dependence in unemployment and the role played in this by intervening low-wage employment. A range of dynamic random and fixed effects estimators are compared. Low-wage employment is found to have almost as large an adverse effect as unemployment on future prospects and the difference in their effects is found to be insignificant. Evidence is presented that low-wage jobs act as the main conduit for repeat unemployment and considerably increases its probability. Obtaining a higher-wage job reduces the increased risk of repeat unemployment to insignificance.

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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 741.

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Length: 31 pages
Date of creation: 2006
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Handle: RePEc:wrk:warwec:741

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Related research
Keywords: Unemployment dynamics ; low-wage employment ; State dependence ; unobserved heterogeneity ; dynamic random effects models ; repeat unemployment;

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Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fabien Postel-Vinay & Hélène Turon, 2006. "On-the-job Search, Productivity Shocks, and the Individual Earnings Process," The Centre for Market and Public Organisation 06/141, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  2. Walter Rasugu Omariba & Fernando Rajulton & Roderic Beaujot, 2008. "Correlated mortality risks of siblings in Kenya," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 18(11), pages 311-336, April. [Downloadable!]
  3. Bigsten, Arne & Mengistae, Taye & Shimeles, Abebe, 2007. "Mobility and earnings in Ethiopia's urban labor markets, 1994-2004," Policy Research Working Paper Series 4168, The World Bank. [Downloadable!]
  4. 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. [Downloadable!]
    Other versions:
  5. Carlos Gradín & Olga Cantó, 2009. "Why are child poverty rates so persistently high in Spain?," Working Papers 123, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
  6. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Socio-Economic Differences in the Satisfaction of High-Pay and Low-Pay Jobs in Europe," MPRA Paper 16733, University Library of Munich, Germany, revised 10 Aug 2009. [Downloadable!]
  7. Georgios Marios Chrysanthou, 2007. "Determinants of Trade Union Membership in Great Britain During 1991-2003," Discussion Papers 07/01, Department of Economics, University of York. [Downloadable!]
    Other versions:
  8. Arulampalam, Wiji & Stewart, Mark B., 2008. "Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators," The Warwick Economics Research Paper Series (TWERPS) 884, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  9. Fabien Postel-Vinay & Hélène Turon, 2005. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," IZA Discussion Papers 1637, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Georgios Marios Chrysanthou, 2008. "Estimating Union Wage Effects in Great Britain During 1991-2003," Discussion Papers 08/12, Department of Economics, University of York. [Downloadable!]
    Other versions:
  11. Bolvig, Iben, 2008. "Low wage after unemployment - the effect of changes in the UI system," Working Papers 08-11, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
  12. Berhane Tesfay, G. & Gardebroek, C., 2008. "Joint-liability borrowing decisions under risk: Empirical evidence from rural microfinance in Ethiopia," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44202, European Association of Agricultural Economists. [Downloadable!]
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