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Low Wage Jobs and Pathways to Better Outcomes




Many people find their first employment in a low wage job. Others accept low wage jobs after a period out of the workforce or unemployed. An issue of vital social interest is the speed with which low wage workers move on to better jobs. This review of the international literature finds that the extent of mobility depends on the definition of low wage, and that the least upwardly mobile are older, less educated workers, including middle aged women, sole mothers and men who have been retrenched. Young, educated, urban workers quickly move to better paid jobs. Everywhere, women are more likely to be low paid than men, and have lower mobility. Higher education reduces the risk of low pay, but not to zero. The paper goes on to examine the extent and sources of wage mobility, and looks carefully at the question of whether a low wage job can be assumed to be preferable to no job (and finds that it cannot). It finds that countries with high levels of wage inequality have lower levels of wage mobility. It concludes with a discussion of possible policy steps that could reduce the risk of people being stuck in low wage jobs for long periods. These should be targeted at both the demand side (the structure of jobs) and the supply side (the capacity of workers).

Suggested Citation

  • Sue Richardson & Lauren Miller-Lewis, 2002. "Low Wage Jobs and Pathways to Better Outcomes," Treasury Working Paper Series 02/29, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:02/29

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    References listed on IDEAS

    1. Creedy, John & Alvarado, Jose, 1998. "Social Expenditure Projections: A Stochastic Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(3), pages 203-212, September.
    2. Ross S. Guest & Ian M. McDonald, 2000. "Population Ageing and Projections of Government Social Outlays in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(1), pages 49-64.
    3. John Stephenson & Grant Scobie, 2002. "The Economics of Population Ageing," Treasury Working Paper Series 02/04, New Zealand Treasury.
    4. Erwin Diewert & Denis Lawrence, 1999. "Measuring New Zealand’s Productivity," Treasury Working Paper Series 99/05, New Zealand Treasury.
    5. Robert Buckle & Kunhong Kim & Julie Tam, 2002. "A structural var approach to estimating budget balance targets," New Zealand Economic Papers, Taylor & Francis Journals, vol. 36(2), pages 149-175.
    6. John Creedy, 2000. "The Growth Of Social Expenditure And Population Ageing," Economic Papers, The Economic Society of Australia, vol. 19(4), pages 15-32, December.
    7. Nick Davis & Richard Fabling, 2002. "Population Ageing and the Efficiency of Fiscal Policy in New Zealand," Treasury Working Paper Series 02/11, New Zealand Treasury.
    8. Polackova, Hana, 1997. "Population aging and financing of government liabilities in New Zealand," Policy Research Working Paper Series 1703, The World Bank.
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    More about this item


    Low wages; mobility; work and welfare; low wage workers.;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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