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Should Low-Wage Workers Care About Where They Work? Assessing the Impact of Employer Characteristics on Low-Wage Mobility

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  • Nicole Guertzgen
  • Anja Heinze

Abstract

This paper studies the importance of employer-specific determinants of intra-firm low-wage mobility in Germany. To address the initial conditions problem and the endogeneity of employer retention, we model intra-firm low-pay transitions using a trivariate Probit model that accounts for selection into low-wage employment and non-random employer drop-out. Using data from the LIAB Linked Employer?Employee panel, our results indicate that for male workers from the service sector, the probability of escaping low-pay increases with employer size. This contrasts with female workers from the service sector, who rather benefit from collective bargaining coverage and local works councils. These findings are consistent with internal labour markets being an important ingredient of male within-firm wage growth, whereas the removal of asymmetric information appears to be more relevant in explaining female workers' wage transitions.

Suggested Citation

  • Nicole Guertzgen & Anja Heinze, 2016. "Should Low-Wage Workers Care About Where They Work? Assessing the Impact of Employer Characteristics on Low-Wage Mobility," Annals of Economics and Statistics, GENES, issue 121-122, pages 385-413.
  • Handle: RePEc:adr:anecst:y:2016:i:121-122:p:385-413
    DOI: 10.15609/annaeconstat2009.121-122.385
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    File URL: http://www.jstor.org/stable/10.15609/annaeconstat2009.121-122.385
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    More about this item

    Keywords

    Wage Mobility; Collective Bargaining Coverage; Trivariate Probit.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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