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Should low-wage workers care about where they work? Assessing the impact of employer characteristics on low-wage mobility

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  • Guertzgen, Nicole
  • Heinze, Anja

Abstract

This paper studies the importance of employer-specific determinants in escaping low earnings in Germany. To address the initial conditions problem and the endogeneity of employer retention, we model (intra-firm) low-pay transitions using a multivariate Probit model that accounts for selection into low-wage employment and non-random employer drop-out. Using data from the LIAB Linked Employer-Employee panel, our results indicate that for male workers from the service sector the probability of escaping low-pay increases with employer size. This contrasts with female workers from the service sector, who rather benefit from collective bargaining coverage and local works councils. These findings are consistent with internal labour markets being an important ingredient of male within-firm wage growth, whereas the removal of asymmetric information appears to be more relevant in explaining female workers' wage transitions.

Suggested Citation

  • Guertzgen, Nicole & Heinze, Anja, 2010. "Should low-wage workers care about where they work? Assessing the impact of employer characteristics on low-wage mobility," ZEW Discussion Papers 10-054, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:10054
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    References listed on IDEAS

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    1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
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    Cited by:

    1. Stephani, Jens, 2012. "Wage growth and career patterns of German low-wage workers," IAB-Discussion Paper 201201, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Grün, Carola & Mahringer, Helmut & Rhein, Thomas, 2011. "Low-wage jobs: a means for employment integration of the unemployed? : evidence from administrative data in Germany and Austria," IAB-Discussion Paper 201101, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Stephani, Jens, 2013. "Does it matter where you work? : employer characteristics and the wage growth of low-wage workers and higher-wage workers," IAB-Discussion Paper 201304, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Daniel D. Schnitzlein & Jens Stephani, 2011. "Lohnmobilität von jüngeren Geringverdienern in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(4), pages 13-30.
    5. Nolte, Andre & Gürtzgen, Nicole, 2015. "Changing Fortunes during Economic Transition - Low-Wage Persistence before and after German Unification," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112828, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    wage mobility; trivariate probit; linked employer-employee data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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