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Low-wage careers: are there dead-end firms and dead-end jobs?

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  • Mosthaf, Alexander
  • Schnabel, Claus
  • Stephani, Jens

Abstract

Using representative linked employer-employee data of the German Federal Employment Agency, this paper shows that just one out of seven full-time employees who earned low wages (i.e. less than two-thirds of the median wage) in 1998/99 was able to earn wages above the low-wage threshold in 2003. Bivariate probit estimations with endogenous selection indicate that upward wage mobility is higher for younger and better qualified low-wage earners, whereas women are substantially less successful. We show that the characteristics of the employing firm also matter for low-wage earners’ probability of escaping low-paid work. In particular small plants and plants with a high share of low-wage earners often seem to be dead ends for low-wage earners. The likelihood of leaving the low-wage sector is also low when staying in unskilled and skilled service occupations and in unskilled commercial and administrational occupations. Consequently, leaving these dead-end plants and occupations appears to be an important instrument for achieving wages above the low-wage threshold. -- Mit repräsentativen verbundenen Arbeitgeber-Arbeitnehmer-Daten der Bundesagentur für Arbeit verdeutlicht diese Studie, dass nur jeder siebte Vollzeitbeschäftigte, der 1998/99 einen Niedriglohn (von weniger als zwei Dritteln des Medianlohns) bezog, bis 2003 den Niedriglohnsektor verlassen konnte. Bivariate Probit-Schätzungen mit endogener Selektion deuten darauf hin, dass die Aufwärtsmobilität für jüngere und besser qualifizierte Geringverdiener höher ausfällt, wohingegen Frauen deutlich weniger erfolgreich sind. Wir zeigen, dass auch die Merkmale des Beschäftigungsbetriebes die Aufstiegswahrscheinlichkeit beeinflussen. Insbesondere kleinere Betriebe und solche mit einem hohen Anteil von Niedriglohnbeschäftigten scheinen häufig Sackgassen für Geringverdiener darzustellen. Die Wahrscheinlichkeit, den Niedriglohnsektor zu verlassen, ist ferner relativ gering, wenn man in bestimmten (meist weniger qualifizierten) Jobs verharrt. Die Abwanderung aus solchen Betrieben und Beschäftigungen, die Sackgassen darstellen, dürfte deshalb ein wichtiges Mittel sein, um höhere Löhne zu erzielen.

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Bibliographic Info

Paper provided by Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW) in its series IWQW Discussion Paper Series with number 01/2010.

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Date of creation: 2010
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Handle: RePEc:zbw:iwqwdp:012010

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Web page: http://www.iwqw.rw.uni-erlangen.de/
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Keywords: low-wage employment; wage mobility; Germany;

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  1. repec:ese:iserwp:2004-08 is not listed on IDEAS
  2. Achatz, Juliane & Gartner, Hermann & Glück, Timea, 2004. "Bonus oder Bias? Mechanismen geschlechtsspezifischer Entlohnung," IAB Discussion Paper 200402, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. repec:ese:iserwp:2001-13 is not listed on IDEAS
  4. 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.
  5. Jung, Sven & Schnabel, Claus, 2009. "Paying more than necessary? The wage cushion in Germany," Discussion Papers 63, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  6. 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.
  7. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series 1232, CESifo Group Munich.
  8. Stewart, M.B. & Swaffield, J.K., 1997. "Low Pay Dynamics and Transition Probabilities," The Warwick Economics Research Paper Series (TWERPS) 495, University of Warwick, Department of Economics.
  9. Lorenzo Cappellari, 2007. "Earnings mobility among Italian low-paid workers," Journal of Population Economics, Springer, vol. 20(2), pages 465-482, April.
  10. Bernd Görzig & Martin Gornig & Axel Werwatz, 2004. "Ostdeutschland: strukturelle Niedriglohnregion?," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 71(44), pages 685-691.
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  13. Iris Koch & Holger Meinken, 2004. "The Employment Panel of the German Federal Employment Agency," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 124(2), pages 315-325.
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Cited by:
  1. Schnitzlein, Daniel D., 2011. "How important is cultural background for the level of intergenerational mobility?," IWQW Discussion Paper Series 06/2011, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  2. Tinkl, Fabian, 2010. "A note on Hadamard differentiability and differentiability in quadratic mean," IWQW Discussion Paper Series 08/2010, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).

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