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When There is No Way Up: Reconsidering Low‐paid Jobs as Stepping‐stones

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  • Alexander Plum
  • Gail Pacheco
  • Kabir Dasgupta

Abstract

The economic literature considers a low‐paid job as a ‘stepping‐stone’ if it improves jobless individuals’ future likelihood of transitioning towards higher pay. The majority of empirical studies rely on annual surveys and are unable to differentiate individuals by their degree of attachment to the low‐paid sector. Using population‐wide administrative data with monthly earnings information, our study first confirms the stepping‐stone effect. However, our analysis indicates that annual survey‐based evidence on the future likelihood of transitioning to higher‐paid jobs is likely overstated when respective groups of low‐paid workers and non‐employed individuals are identified by binary indicators.

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  • Alexander Plum & Gail Pacheco & Kabir Dasgupta, 2021. "When There is No Way Up: Reconsidering Low‐paid Jobs as Stepping‐stones," The Economic Record, The Economic Society of Australia, vol. 97(318), pages 387-409, September.
  • Handle: RePEc:bla:ecorec:v:97:y:2021:i:318:p:387-409
    DOI: 10.1111/1475-4932.12609
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Are low-paid jobs really a stepping stone to better pay? A new study suggests it’s not that simple
      by ? in Forum:Blog on 2021-06-24 10:52:27

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    More about this item

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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