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Escaping the low pay trap: do labour market entrants stand a chance?

Author

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  • Pavlopoulos, Dimitris
  • Fouarge, Didier

Abstract

This paper investigates the wage and employment perspectives of low-wage labour market entrants, using panel data from the UK, the Netherlands, and Germany. We apply a competing risks hazard model of transitions from low pay to higher pay, to unemployment or to inactivity. Low pay is found to be a rather transitory experience. However, a significant amount of transitions between low pay and non-employment is indicated. Exits from low-pay seem to be determined by firm-specific skills in the UK and the Netherlands, while by formal educational and vocational training qualifications in Germany.

Suggested Citation

  • Pavlopoulos, Dimitris & Fouarge, Didier, 2006. "Escaping the low pay trap: do labour market entrants stand a chance?," MPRA Paper 226, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:226
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    File URL: https://mpra.ub.uni-muenchen.de/226/1/MPRA_paper_226.pdf
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    References listed on IDEAS

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    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    2. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
    3. Grip Andries de & Wolbers Maarten H.J., 2003. "Do Low-Skilled Youngsters get Better Jobs in Countries where Internal Labour Markets Dominate?," ROA Research Memorandum 008, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    4. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, October.
    5. Eyraud, Francois & Marsden, David & Silvestre, Jean-Jacques, 1990. "Occupational and internal labour markets in Britain and France," LSE Research Online Documents on Economics 21305, London School of Economics and Political Science, LSE Library.
    6. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
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    Cited by:

    1. repec:aia:aiaswp:wp46 is not listed on IDEAS
    2. Adriana Fontes Rocha Expósito Da Silva & Valéria Lúcia Pero, 2011. "Low-Paid Employment In Brazil," Anais do XXXVIII Encontro Nacional de Economia [Proceedings of the 38th Brazilian Economics Meeting] 140, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

    More about this item

    Keywords

    low pay; competing risks; panel data;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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