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The dynamics of low pay employment in Australia

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  • Lixin Cai

Abstract

Purpose - – The purpose of this paper is to enhance understanding low pay dynamics of Australian employees, with a focus on the determination of low pay duration. Design/methodology/approach - – The study draws on a representative longitudinal survey of Australian households to provide empirical findings from both descriptive analysis and econometric modelling. Findings - – The results show that workers who have entered low pay from higher pay also have a higher hazard rate of transitioning to higher pay; and those who have entered low pay from non-employment are more likely to return to non-employment. Union members, public sector jobs and working in medium to large size firms tend to increase the hazard rate of transitioning to higher pay, while immigrants from non-English speaking countries and workers with health problems have a lower hazard rate of moving into higher pay. There is some evidence that the longer a worker is on low pay, the less likely he or she is to transition to higher pay. Originality/value - – This study addresses an information gap regarding the determination of low pay duration. The findings help identify workers who are at high risk of staying on low pay or transitioning into non-employment and are therefore informative for developing targeted policy to help the low paid maintain employment and/or move up the earnings ladder. The results also suggest that policy intervention should take place at an early stage of a low pay spell.

Suggested Citation

  • 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.
  • Handle: RePEc:eme:ijmpps:v:36:y:2015:i:7:p:1095-1123
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    More about this item

    Keywords

    Earnings; Data analysis; Modelling; Low pay;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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