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

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  • 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
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-291
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    References listed on IDEAS

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    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.
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    Cited by:

    1. Claus Schnabel, 2016. "Low-wage employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 276-276, July.
    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).

    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

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