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The Scarring Effects of Unemployment, Low Pay and Skills Under-utilisation in Australia Compared

  • Mavromaras, Kostas G.

    ()

    (NILS, Flinders University)

  • Sloane, Peter J.

    ()

    (Swansea University)

  • Wei, Zhang

    ()

    (NILS, Flinders University)

There is a substantial literature on the scarring effects of unemployment on future employment prospects and a smaller one on the scarring effects of low pay, but the possibility that skills mismatch in the form of skills under-utilisation, may also have similar detrimental effects, has not previously been considered. This paper uses the first ten waves of the HILDA survey data to investigate the inter-related dynamics of unemployment, low pay and skills under-utilisation in Australia, focussing on differences by gender and educational pathways. It shows that skills under-utilisation also exhibits scarring effects, in addition to earlier evidence on wage penalties and reduced job satisfaction.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7440.

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Length: 30 pages
Date of creation: Jun 2013
Date of revision:
Publication status: forthcoming in: Applied Economics, 2015
Handle: RePEc:iza:izadps:dp7440
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  1. Francis Green & Yu Zhu, 2008. "Overqualification, Job Dissatisfaction, and Increasing Dispersion in the Returns to Graduate Education," Studies in Economics 0803, School of Economics, University of Kent.
  2. Sloane, P. J. & Theodossiou, I., . "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
  3. Mavromaras, Kostas G. & McGuinness, Seamus & Fok, Yin King, 2007. "Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market," IZA Discussion Papers 2837, Institute for the Study of Labor (IZA).
  4. S. Baert & B. Cockx & D. Verhaest, 2012. "Overeducation at the start of the career - stepping stone or trap?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/787, Ghent University, Faculty of Economics and Business Administration.
  5. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
  6. Narendranathan, Wiji & Elias, Peter, 1993. "Influences of Past History on the Incidence of Youth Unemployment: Empirical Findings for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 161-85, May.
  7. Flaig, Gebhard & Licht, Georg & Steiner, Viktor, 1993. "Testing for state dependence effects in a dynamic model of male unemployment behaviour," ZEW Discussion Papers 93-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Kostas Mavromaras & Seamus McGuinness & Nigel O’Leary & Peter Sloane & Yin King Fok, 2007. "The Problem of Overskilling in Australia and Britain," Melbourne Institute Working Paper Series wp2007n33, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  9. Nicole Watson & Mark Wooden, 2004. "The HILDA Survey Four Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(3), pages 343-349, 09.
  10. Mavromaras, Kostas G. & McGuinness, Seamus & Fok, Yin King, 2009. "Overskilling Dynamics and Education Pathways," IZA Discussion Papers 4321, Institute for the Study of Labor (IZA).
  11. 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.
  12. Sloane, P J & Theodossiou, I, 1996. "Earnings Mobility, Family Income and Low Pay," Economic Journal, Royal Economic Society, vol. 106(436), pages 657-66, May.
  13. Richard Desjardins & Kjell Rubenson, 2011. "An Analysis of Skill Mismatch Using Direct Measures of Skills," OECD Education Working Papers 63, OECD Publishing.
  14. Muhleisen, Martin & Zimmermann, Klaus F., 1994. "A panel analysis of job changes and unemployment," European Economic Review, Elsevier, vol. 38(3-4), pages 793-801, April.
  15. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  16. Hielke Buddelmeyer & Wang-Sheng Lee & Mark Wooden, 2009. "Low-Paid Employment and Unemployment Dynamics in Australia," Melbourne Institute Working Paper Series wp2009n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  17. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
  18. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  19. Clark, Ken & Kanellopoulos, Nick, 2009. "Low Pay Persistence in European Countries," IZA Discussion Papers 4183, Institute for the Study of Labor (IZA).
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