IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp7440.html
   My bibliography  Save this paper

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

Author

Listed:
  • Mavromaras, Kostas

    (University of Adelaide)

  • Sloane, Peter J.

    (Swansea University)

  • Wei, Zhang

    (University of Adelaide)

Abstract

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.

Suggested Citation

  • Mavromaras, Kostas & Sloane, Peter J. & Wei, Zhang, 2013. "The Scarring Effects of Unemployment, Low Pay and Skills Under-utilisation in Australia Compared," IZA Discussion Papers 7440, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7440
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp7440.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard Desjardins & Kjell Rubenson, 2011. "An Analysis of Skill Mismatch Using Direct Measures of Skills," OECD Education Working Papers 63, OECD Publishing.
    2. Paul Gregg, 1997. "Jobs, Wages And Poverty: Patterns Of Persistence And Mobility In The Flexible Labour Market," CEP Reports 03, Centre for Economic Performance, LSE.
    3. 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.
    4. 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 434-452, July.
    5. 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, January.
    6. 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, September.
    7. Kostas Mavromaras & Seamus Mcguinness & Nigel O'Leary & Peter Sloane & Yi King Fok, 2010. "The Problem Of Overskilling In Australia And Britain," Manchester School, University of Manchester, vol. 78(3), pages 219-241, June.
    8. Ken Clark & Nikolaos C. Kanellopoulos, 2009. "Low Pay Persistence in European Countries," SOEPpapers on Multidisciplinary Panel Data Research 207, DIW Berlin, The German Socio-Economic Panel (SOEP).
    9. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
    10. Rita Asplund & Peter Sloane & Ioannis Theodossiou (ed.), 1998. "Low Pay and Earnings Mobility in Europe," Books, Edward Elgar Publishing, number 1533.
    11. Rosen, Sherwin, 2007. "Studies in Labor Markets," National Bureau of Economic Research Books, University of Chicago Press, number 9780226726304, December.
    12. repec:ucp:bknber:9780226726281 is not listed on IDEAS
    13. Francis Green & Yu Zhu, 2010. "Overqualification, job dissatisfaction, and increasing dispersion in the returns to graduate education," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 740-763, October.
    14. Mavromaras, Kostas & McGuinness, Seamus, 2012. "Overskilling dynamics and education pathways," Economics of Education Review, Elsevier, vol. 31(5), pages 619-628.
    15. Clark, Ken & Kanellopoulos, Nikolaos C., 2013. "Low pay persistence in Europe," Labour Economics, Elsevier, vol. 23(C), pages 122-134.
    16. Sloane, P J & Theodossiou, I, 1996. "Earnings Mobility, Family Income and Low Pay," Economic Journal, Royal Economic Society, vol. 106(436), pages 657-666, May.
    17. 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 161-185, May.
    18. Baert, Stijn & Cockx, Bart & Verhaest, Dieter, 2013. "Overeducation at the start of the career: Stepping stone or trap?," Labour Economics, Elsevier, vol. 25(C), pages 123-140.
    19. 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.
    20. Kostas Mavromaras & Seamus Mcguinness & Yin King Fok, 2009. "Assessing the Incidence and Wage Effects of Overskilling in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 60-72, March.
    21. Sattinger, Michael, 2012. "Qualitative Mismatches," Foundations and Trends(R) in Microeconomics, now publishers, vol. 8(1–2), pages 1-168, December.
    22. 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.
    23. Sloane, P. J. & Theodossiou, I., "undated". "An Econometric Analysis of Low Pay Earnings Mobility," Working Papers 98-05, Department of Economics, University of Aberdeen.
    24. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    25. Paul Frijters, 2000. "Persistencies in the Labor Market," Econometric Society World Congress 2000 Contributed Papers 1303, Econometric Society.
    26. 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 - Leibniz Centre for European Economic Research.
    27. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, in: Studies in Labor Markets, pages 91-140, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rycx, François & Santosuosso, Giulia & Vermeylen, Guillaume, 2022. "The Over-Education Wage Penalty among PhD Holders: A European Perspective," IZA Discussion Papers 15417, Institute of Labor Economics (IZA).
    2. Susaeta, Lourdes & Suárez Ruz, Esperanza & Gutiérrez-Martínez, Isis & Idrovo Carlier, Sandra & Pin, José Ramon, 2015. "A Comparative Analysis of Youth Labor Market Exclusion," IESE Research Papers D/1100, IESE Business School.
    3. Wouter Zwysen, 2015. "The effects of father’s worklessness on young adults in the UK," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-15, December.
    4. Mangan, John & Trendle, Bernard, 2017. "Hard-to-fill vacancies: An analysis of demand side responses in the Australian state of Queensland," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 49-56.
    5. Amy Wei Tian & Ying Wang & Terence Chia, 2018. "Put My Skills to Use? Understanding the Joint Effect of Job Security and Skill Utilization on Job Satisfaction Between Skilled Migrants and Australian Born Workers in Australia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(1), pages 259-275, August.
    6. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    7. PN (Raja) Junankar, 2015. "The impact of the Global Financial Crisis on youth unemployment," The Economic and Labour Relations Review, , vol. 26(2), pages 191-217, June.
    8. Valerie Egdell  & Vanessa Beck, 2020. "A Capability Approach to Understand the Scarring Effects of Unemployment and Job Insecurity: Developing the Research Agenda," Work, Employment & Society, British Sociological Association, vol. 34(5), pages 937-948, October.
    9. Floro Ernesto Caroleo & Francesco Pastore, 2018. "Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 999-1032, June.
    10. Crawley, Andrew & Welch, Sarah & Yung, Julieta, 2021. "Improving estimates of job matching efficiency with different measures of unemployment," Journal of Macroeconomics, Elsevier, vol. 67(C).
    11. Deborah A. Cobb‐Clark & Lihini De Silva, 2021. "Participation, Unemployment, and Wages," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 482-493, December.
    12. Stijn Baert & Dieter Verhaest, 2019. "Unemployment or Overeducation: Which is a Worse Signal to Employers?," De Economist, Springer, vol. 167(1), pages 1-21, March.
    13. O. Fiona Yap, 2020. "A New Normal or Business-as-Usual? Lessons for COVID-19 from Financial Crises in East and Southeast Asia," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(5), pages 1504-1534, December.
    14. Bryn Lampe & Catherine de Fontenay & Jessica Nugent & Patrick Jomini, 2022. "Climbing the Jobs Ladder Slower: Young People in a Weak Labour Market," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 40-70, March.
    15. Zwysen, Wouter, 2014. "A disadvantaged childhood matters more if local unemployment is high," ISER Working Paper Series 2014-43, Institute for Social and Economic Research.
    16. Mattia Filomena, 2021. "Unemployment Scarring Effects: A Symposium On Empirical Literature," Working Papers 453, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    17. Tomoko Kishi & Shigeki Kano, 2017. "Labour market transitions in Australia and Japan: A Panel Data Analysis," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 20(3), pages 175-197.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mavromaras, Kostas & McGuinness, Seamus, 2012. "Overskilling dynamics and education pathways," Economics of Education Review, Elsevier, vol. 31(5), pages 619-628.
    2. 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.
    3. Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
    4. Cai, Lixin & Mavromaras, Kostas & Sloane, Peter J., 2016. "Low Paid Employment in Britain: Estimating State-Dependence and Stepping Stone Effects," IZA Discussion Papers 9633, Institute of Labor Economics (IZA).
    5. Clark, Ken & Kanellopoulos, Nikolaos C., 2013. "Low pay persistence in Europe," Labour Economics, Elsevier, vol. 23(C), pages 122-134.
    6. Meroni, Elena Claudia & Vera-Toscano, Esperanza, 2017. "The persistence of overeducation among recent graduates," Labour Economics, Elsevier, vol. 48(C), pages 120-143.
    7. Kostas Mavromaras & Seamus McGuinness & Nigel O'Leary & Peter Sloane & Zhang Wei, 2013. "Job Mismatches and Labour Market Outcomes: Panel Evidence on University Graduates," The Economic Record, The Economic Society of Australia, vol. 89(286), pages 382-395, September.
    8. Syamsul Hidayat Pasaribu, 2016. "Persistence of Individual Unemployment in Indonesia: Dynamic Probit Analysis from Panel SUSENAS 2008-2010," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1239-1246.
    9. Schnitzlein, Daniel D. & Stephani, Jens, 2016. "Locus of Control and low-wage mobility," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 164-177.
    10. Sara Ayllón & Javier Valbuena & Alexander Plum, 2022. "Youth Unemployment and Stigmatization Over the Business Cycle in Europe," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 103-129, February.
    11. Amynah Gangji & Robert Plasman, 2008. "Microeconomic analysis of unemployment persistence in Belgium," International Journal of Manpower, Emerald Group Publishing Limited, vol. 29(3), pages 280-298, June.
    12. Cuesta, Maite Blázquez & Budría, Santiago, 2017. "Unemployment persistence: How important are non-cognitive skills?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 29-37.
    13. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.
    14. 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.
    15. Plum, Alexander & Knies, Gundi, 2015. "Earnings prospects for low-paid workers higher than for the unemployed but only in high-pay areas with high unemployment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112845, Verein für Socialpolitik / German Economic Association.
    16. Plum, Alexander & Knies, Gundi, 2015. "Does neighbourhood unemployment affect the springboard effect of low pay?," ISER Working Paper Series 2015-20, Institute for Social and Economic Research.
    17. Christiana Charalambidou & Steven McIntosh, 2021. "Over‐education in Cyprus: Micro and macro determinants, persistence and state dependence. A dynamic panel analysis," Manchester School, University of Manchester, vol. 89(2), pages 172-189, March.
    18. Giarda, Elena, 2013. "Persistency of financial distress amongst Italian households: Evidence from dynamic models for binary panel data," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3425-3434.
    19. Alexander Mosthaf & Thorsten Schank & Claus Schnabel, 2014. "Low-wage employment versus unemployment: Which one provides better prospects for women?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-17, December.
    20. Demoussis, Michael & Giannakopoulos, Nicholas, 2006. "The dynamics of home computer ownership in Greece," Information Economics and Policy, Elsevier, vol. 18(1), pages 73-86, March.

    More about this item

    Keywords

    dynamic estimation; state dependence; education pathways; job quality;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7440. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.