IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v90y2014i291p486-506.html
   My bibliography  Save this article

State-Dependence and Stepping-Stone Effects of Low-Pay Employment in Australia

Author

Listed:
  • Lixin Cai

Abstract

Using the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this study shows that low-pay employment not only exhibits state-dependence, but it also has a stepping-stone effect towards higher pay, after observed and unobserved individual heterogeneity is accounted for. The results also show that, other things being equal, people who are on low pay are more likely to be in employment in the future than those who are either unemployed or not in the labour force. However, people on low pay do not appear to be more likely to become jobless in the future than those on higher pay.

Suggested Citation

  • Lixin Cai, 2014. "State-Dependence and Stepping-Stone Effects of Low-Pay Employment in Australia," The Economic Record, The Economic Society of Australia, vol. 90(291), pages 486-506, December.
  • Handle: RePEc:bla:ecorec:v:90:y:2014:i:291:p:486-506
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-291
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hielke Buddelmeyer & Wang‐Sheng Lee & Mark Wooden, 2010. "Low‐Paid Employment and Unemployment Dynamics in Australia," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 28-48, March.
    2. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54, January.
    3. Daniel Perkins & Rosanna Scuttella, 2008. "Improving Employment Retention and Advancement of Low-Paid Workers," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(1), pages 97-114.
    4. Lorenzo Cappellari & Stephen P. Jenkins, 2008. "Estimating low pay transition probabilities accounting for endogenous selection mechanisms," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 57(2), pages 165-186, April.
    5. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348, September.
    6. 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.
    7. Uhlendorff, Arne, 2006. "From No Pay to Low Pay and Back Again? A Multi-State Model of Low Pay Dynamics," IZA Discussion Papers 2482, Institute of Labor Economics (IZA).
    8. Andreas Knabe & Alexander Plum, 2010. "Low-Wage Jobs - Stepping Stone or Poverty Trap?," SOEPpapers on Multidisciplinary Panel Data Research 337, DIW Berlin, The German Socio-Economic Panel (SOEP).
    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. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, April.
    11. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-764, May.
    12. 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.
    13. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
    14. Sloane, P. J. & Theodossiou, I., "undated". "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
    15. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Claus Schnabel, 2021. "Low-wage employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 276-276, March.
    2. Kostas Mavromaras & Darcy Fitzpatrick, 2017. "Self-employment Dynamics in Australia and the Importance of State Dependence," The Economic Record, The Economic Society of Australia, vol. 93, pages 144-170, June.
    3. Jeff Borland & Michael Coelli, 2016. "Labour Market Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 92(299), pages 517-547, December.
    4. Pacheco, Gail & Plum, Alexander T. & Sloane, Peter J., 2020. "Not Much Bounce in the Springboard: On the Mobility of Low Pay Workers," IZA Discussion Papers 12896, Institute of Labor Economics (IZA).
    5. Pritadrajati, Dyah S. & Kusuma, Anggita C.M. & Saxena, Sweta C., 2021. "Scarred for life: Lasting consequences of unemployment and informal self-employment," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 206-219.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lixin Cai, 2015. "The dynamics of low pay employment in Australia," International Journal of Manpower, Emerald Group Publishing, vol. 36(7), pages 1095-1123, October.
    2. Hielke Buddelmeyer & Wang‐Sheng Lee & Mark Wooden, 2010. "Low‐Paid Employment and Unemployment Dynamics in Australia," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 28-48, March.
    3. Cai, Lixin & Mavromaras, Kostas & Sloane, Peter J., 2016. "Low Paid Employment in Britain: Estimating State-Dependence and Stepping Stone Effects," IZA Discussion Papers 9633, Institute of Labor Economics (IZA).
    4. Kostas Mavromaras & Darcy Fitzpatrick, 2017. "Self-employment Dynamics in Australia and the Importance of State Dependence," The Economic Record, The Economic Society of Australia, vol. 93, pages 144-170, June.
    5. Clark, Ken & Kanellopoulos, Nikolaos C., 2013. "Low pay persistence in Europe," Labour Economics, Elsevier, vol. 23(C), pages 122-134.
    6. Aretz, Bodo & Gürtzgen, Nicole, 2012. "What explains the decline in wage mobility in the German low-wage sector?," ZEW Discussion Papers 12-041, ZEW - Leibniz Centre for European Economic Research.
    7. Nicole Gürtzgen & André Diegmann (né Nolte), 2020. "Does low‐pay persist across different regimes? Evidence from German Unification," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(3), pages 413-440, July.
    8. Schnitzlein, Daniel D. & Stephani, Jens, 2016. "Locus of Control and low-wage mobility," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 164-177.
    9. Kostas Mavromaras & Peter Sloane & Zhang Wei, 2015. "The scarring effects of unemployment, low pay and skills under-utilization in Australia compared," Applied Economics, Taylor & Francis Journals, vol. 47(23), pages 2413-2429, May.
    10. Andreas Knabe & Alexander Plum, 2013. "Low-wage Jobs — Springboard to High-paid Ones?," LABOUR, CEIS, vol. 27(3), pages 310-330, September.
    11. Manudeep Bhuller & Christian N. Brinch & Sebastian Königs, 2017. "Time Aggregation and State Dependence in Welfare Receipt," Economic Journal, Royal Economic Society, vol. 127(604), pages 1833-1873, September.
    12. Alexander Mosthaf & Thorsten Schank & Claus Schnabel, 2014. "Low-wage employment versus unemployment: Which one provides better prospects for women?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-17, December.
    13. Plum, Alexander & Knies, Gundi, 2015. "Does neighbourhood unemployment affect the springboard effect of low pay?," ISER Working Paper Series 2015-20, Institute for Social and Economic Research.
    14. Plum, Alexander & Knies, Gundi, 2015. "Earnings prospects for low-paid workers higher than for the unemployed but only in high-pay areas with high unemployment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112845, Verein für Socialpolitik / German Economic Association.
    15. Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
    16. Umut Oguzoglu, 2010. "Dynamics of work limitation and work in Australia," Health Economics, John Wiley & Sons, Ltd., vol. 19(6), pages 656-669, June.
    17. Kabir Dasgupta & Alexander Plum, 2020. "Human Capital Formation and Changes in Low Pay Persistence," Working Papers 2020-15, Auckland University of Technology, Department of Economics.
    18. 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).
    19. Mosthaf, Alexander & Schnabel, Claus & Stephani, Jens, 2011. "Low-wage careers: Are there dead-end firms and dead-end jobs?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 43(3), pages 231-249.
    20. Stephani, Jens, 2012. "Wage growth and career patterns of German low-wage workers," IAB-Discussion Paper 201201, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:90:y:2014:i:291:p:486-506. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/esausea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.