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The Inter-related Dynamics of Unemployment and Low Pay

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  • Mark B. Stewart

    () (University of Warwick)

Abstract

This paper examines the extent of state dependence in individual unemployment and low paid employment and the inter-related dynamics between the two. Evidence is presented that (after controlling for unobserved heterogeneity and initial conditions) the low paid are more likely to become unemployed and the unemployed more likely to be low paid on re-entry to employment. The impacts of unemployment and low pay are found to be insignificantly different from one another, both on the probability of unemployment in the next period and on the probability of low pay. Evidence is presented that low paid jobs act as the main conduit for repeat unemployment and considerably increase its probability. Those who get a better paid job eliminate the increased risk of repeat unemployment.

Suggested Citation

  • Mark B. Stewart, 2002. "The Inter-related Dynamics of Unemployment and Low Pay," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B2-4, International Conferences on Panel Data.
  • Handle: RePEc:cpd:pd2002:b2-4
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    File URL: http://econpapers.repec.org/cpd/2002/108_Stewart.pdf
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    References listed on IDEAS

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    Cited by:

    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. Lorenzo Cappellari & Stephen P. Jenkins, 2014. "The Dynamics of Social Assistance Benefit Receipt in Britain," Research in Labor Economics, in: Stéphane Carcillo & Herwig Immervoll & Stephen P. Jenkins & Sebastian Königs & Konstantinos Tatsiram (ed.), Safety Nets and Benefit Dependence, volume 39, pages 41-79, Emerald Publishing Ltd.
    3. Arulampalam, Wiji, 2001. "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," Economic Journal, Royal Economic Society, vol. 111(475), pages 585-606, November.
    4. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages 189-213, June.
    5. Pinheiro, Roberto & Visschers, Ludo, 2015. "Unemployment risk and wage differentials," Journal of Economic Theory, Elsevier, vol. 157(C), pages 397-424.
    6. Marjan, MAES, 2008. "Poverty persistence among Belgian elderly in the transition from work to retirement : an empirical analysis," Discussion Papers (ECON - Département des Sciences Economiques) 2008042, Université catholique de Louvain, Département des Sciences Economiques.
    7. Luigi Aldieri, 2009. "The Effects of Unemployment Experiences on Subsequent Wages in Italy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 52(2), pages 109-119.
    8. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute of Labor Economics (IZA).
    9. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2000. "Temporary jobs: who gets them, what are they worth, and do they lead anywhere?," ISER Working Paper Series 2000-13, Institute for Social and Economic Research.
    10. Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, March.
    11. Bardasi, Elena & Francesconi, Marco, 2000. "The Effect of Non-Standard Employment on Mental Health in Britain," IZA Discussion Papers 232, Institute of Labor Economics (IZA).
    12. Lorenzo Cappellari & Richard Dorsett & Getinet Haile, 2010. "State dependence and unobserved heterogeneity in the employment transitions of the over-50s," Empirical Economics, Springer, vol. 38(3), pages 523-554, June.
    13. Cappellari, Lorenzo & Jenkins, Stephen P., 2008. "The Dynamics of Social Assistance Receipt: Measurement and Modelling Issues, with an Application to Britain," IZA Discussion Papers 3765, Institute of Labor Economics (IZA).
    14. Konstantinos Pouliakas & Ioannis Theodossiou, 2005. "Socio-Economic Differences in the Perceived Quality of High and Low-Paid Jobs in Europe," Labor and Demography 0506002, University Library of Munich, Germany.
    15. Paul Gregg & Emma Tominey, 2004. "The Wage Scar from Youth Unemployment," The Centre for Market and Public Organisation 04/097, The Centre for Market and Public Organisation, University of Bristol, UK.
    16. 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.
    17. Dragana Djurdjevic, 2005. "Unemployment and Under-Employment: The Case of Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(I), pages 23-70, March.
    18. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series 1232, CESifo.
    19. Maes, Marjan, 2008. "Poverty persistence among Belgian elderly: true or spurious?," ISER Working Paper Series 2008-24, Institute for Social and Economic Research.

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    More about this item

    Keywords

    unemployment; low pay; dynamics; state dependence; unobserved heterogeneity; wage mobility; dynamic random effects models; repeat unemployment; recurrent unemployment.;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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