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Low-Wage Jobs – Springboard to High-Paid Ones?

Author

Listed:
  • Andreas Knabe

    (Otto-von-Guericke University Magdeburg and CESifo)

  • Alexander Plum

    (Otto-von-Guericke University Magdeburg)

Abstract

We examine whether low-paid jobs have an effect on the probability that unemployed persons obtain better-paid jobs in the future (springboard effect). We make use of data from the German Socio-Economic Panel (SOEP) and apply a dynamic random-effects probit model. Our results suggest that low-wage jobs can act as springboards to better-paid work. The improvement of the chance to obtain a high-wage job by accepting low-paid work is particularly large for less-skilled persons and for individuals with longer periods of unemployment. Low-paid work is less beneficial if the job is associated with a low social status.

Suggested Citation

  • Andreas Knabe & Alexander Plum, 2012. "Low-Wage Jobs – Springboard to High-Paid Ones?," CEIS Research Paper 246, Tor Vergata University, CEIS, revised 26 Jul 2012.
    • Handle: RePEc:rtv:ceisrp:246
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    References listed on IDEAS

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    More about this item

    Keywords

    dynamic random effects models; low pay dynamics; state dependence; unemployment dynamics;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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