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Low-Pay Mobility in the Swiss Labor Market

Author

Listed:
  • Augustin de Coulon

    (CEP, London School of Economics and Political Science)

  • Boris A. Zürcher

    (State Secretariat for Economic Affairs, Switzerland)

Abstract

This paper uses a panel of 7617 individuals drawn from the Swiss Labor Force Survey (SLFS) to study i) low-pay incidence and ii) individual transition probabilities at the lower end of the wage distribution. In a first step, various raw transition probabilities are computed for the period between 1992 and 1998, and some descriptive and comparative statistics on wage mobility are presented. In the second step, the determinants of low-pay incidence are estimated, and in a third step, the determinants of transitions into and out of the low-pay segment are analyzed. This analysis is based on a bivariate probit model which takes into account the potential endogeneity of the initial state. With regard to low-pay incidence the results to a large extent confirm previous ones obtained by standard wage equations. Low-pay incidence is influenced by certain personal characteristics, but as well by the affiliation to particular economic sectors. When investigating mobility, it is found that low-pay spells are both, transitory and persistent events. On the one hand, many workers low-paid at some point in time succeed to escape the low-pay segment within a two-year period. For those remaining low-paid, on the other hand, our results suggest that state dependence rather than heterogeneity seems to affect more the persistence in low-pay status.

Suggested Citation

  • Augustin de Coulon & Boris A. Zürcher, 2001. "Low-Pay Mobility in the Swiss Labor Market," Working Papers 447, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:447
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    References listed on IDEAS

    as
    1. Meng, Chun-Lo & Schmidt, Peter, 1985. "On the Cost of Partial Observability in the Bivariate Probit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 71-85, February.
    2. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
    3. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
    4. Dickens, Richard, 2000. "Caught in a Trap? Wage Mobility in Great Britain: 1975-1994," Economica, London School of Economics and Political Science, vol. 67(268), pages 477-497, November.
    5. Dorothé Bonjour & Michael Gerfin, 1995. "Einkommensungleichheit zwischen Frauen und Männern. Eine ökonometrische Analyse der Schweizer Arbeitskräfteerhebung: Kommentar," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(IV), pages 701-710, December.
    6. Dorothe Bonjour & Michael Gerfin, 1995. "Einkommensungleichheit zwischen Frauen und Männern. Eine ökonomische Analyse der Schweizer Arbeitskräfteerhebung: Kommentar," Diskussionsschriften dp9503, Universitaet Bern, Departement Volkswirtschaft.
    7. Shorrocks, A F, 1976. "Income Mobility and the Markov Assumption," Economic Journal, Royal Economic Society, vol. 86(343), pages 566-578, September.
    8. Lorenzo Cappellari, 1999. "Low-Wage Mobility in the Italian Labour Market," The Warwick Economics Research Paper Series (TWERPS) 531, University of Warwick, Department of Economics.
    9. Heckman, James J & Borjas, George J, 1980. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence," Economica, London School of Economics and Political Science, vol. 47(187), pages 247-283, August.
    10. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
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    More about this item

    Keywords

    Low-pay; Wage mobility; Transition models;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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