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Low-wage careers: are there dead-end firms and dead-end jobs?

Author

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  • Mosthaf, Alexander
  • Schnabel, Claus
  • Stephani, Jens

Abstract

Using representative linked employer-employee data of the German Federal Employment Agency, this paper shows that just one out of seven full-time employees who earned low wages (i.e. less than two-thirds of the median wage) in 1998/99 was able to earn wages above the low-wage threshold in 2003. Bivariate probit estimations with endogenous selection indicate that upward wage mobility is higher for younger and better qualified low-wage earners, whereas women are substantially less successful. We show that the characteristics of the employing firm also matter for low-wage earners' probability of escaping low-paid work. In particular small plants and plants with a high share of low-wage earners often seem to be dead ends for low-wage earners. The likelihood of leaving the low-wage sector is also low when staying in unskilled and skilled service occupations and in unskilled commercial and administrational occupations. Consequently, leaving these dead-end plants and occupations appears to be an important instrument for achieving wages above the low-wage threshold.

Suggested Citation

  • Mosthaf, Alexander & Schnabel, Claus & Stephani, Jens, 2009. "Low-wage careers: are there dead-end firms and dead-end jobs?," Discussion Papers 66, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    • Handle: RePEc:zbw:faulre:66
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    Cited by:

    1. Hirsch, Boris & Schnabel, Claus, 2011. "Let's take bargaining models seriously: The decline in union power in Germany, 1992 - 2009," FAU Discussion Papers in Economics 10/2011, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    2. Boris Hirsch & Steffen Mueller, 2014. "Firm leadership and the gender pay gap: do active owners discriminate more than hired managers?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 47(1), pages 129-142, March.
    3. Schnitzlein, Daniel D., 2012. "How important is cultural background for the level of intergenerational mobility?," Economics Letters, Elsevier, vol. 114(3), pages 335-337.
    4. Klein, Ingo & Fischer, Matthias J. & Pleier, Thomas, 2011. "Weighted power mean copulas: Theory and application," FAU Discussion Papers in Economics 01/2011, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics, revised 2011.
    5. Hirsch, Boris & Mueller, Steffen, 2010. "Temporary agency work and the user firm's productivity: First evidence from German Panel Data," Discussion Papers 68, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    6. Eichhorst, Werner & Konle-Seidl, Regina & Koslowski, Alison & Marx, Paul, 2010. "Quantity over Quality? A European Comparison of the Changing Nature of Transitions between Non-Employment and Employment," IZA Discussion Papers 5285, Institute of Labor Economics (IZA).
    7. Alexander Mosthaf, 2014. "Do Scarring Effects of Low-Wage Employment and Non-Employment Differ BETWEEN Levels of Qualification?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(2), pages 154-177, May.
    8. Anna Baranowska-Rataj & Zoltán Elekes & Rikard Eriksson, 2021. "Escaping from Low-Wage Employment: The Role of Co-worker Networks," CERS-IE WORKING PAPERS 2123, Institute of Economics, Centre for Economic and Regional Studies.
    9. Tinkl, Fabian, 2010. "A note on Hadamard differentiability and differentiability in quadratic mean," FAU Discussion Papers in Economics 08/2010, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.

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    Keywords

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    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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